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Binance, the world’s largest cryptocurrency exchange by volume, has recently announced its exit from Canada. This comes after the Canadian regulatory authorities imposed strict regulations for crypto asset trading platforms operating in the country. Through a tweet on Friday, Binance announced that it does not agree with the new guidelines and is proactively withdrawing operations in Canada.
The announcement read, “Unfortunately, today we are announcing that Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace. We would like to thank those regulators who worked with us collaboratively to address the needs of Canadian users. Albeit a small market, it held sentimental value for us as the home country of our founder.”
Why Did Binance Make the Exit Move?
Canadian Securities Administrators (CSA), the body responsible for ensuring fair capital markets within the country, recently mandated a pre-registration process for crypto asset trading platforms. The process involves declaring compliance with a set of new regulatory guidelines. According to these guidelines, crypto businesses will now have to seek CSA’s approval before allowing users to buy or sell stablecoins on their platforms.
Additionally, the guidelines prohibit them from offering any leverage to users including margin and credit. The guidelines also demanded a well-defined segregation of Canadian client assets from proprietary business assets. The CSA added that firms failing to comply could face enforcement action, offloading of Canadian users, and jurisdiction blocking. The regulators further clarified that any platform operating outside Canada, that is accessible to Canadians will also be considered under the country’s jurisdiction to ensure securities regulation.
Unfortunately, today we are announcing that Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace.
We would like to thank those regulators who worked with us collaboratively to address the needs of Canadian users.…
— Binance (@binance) May 12, 2023
Reacting to the new regulatory restrictions, Binance’s tweet read, “We had high hopes for the rest of the Canadian blockchain industry. Unfortunately, new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canadian market no longer tenable for Binance. We put off this decision as long as we could explore other reasonable avenues to protect our Canadian users, but it has become apparent that there are none.” Binance also clarified that it will soon roll out an email to all its Canadian users explaining how the exit will impact their Binance accounts.
Commenting on its future in Canada, Binance added, “While we do not agree with the new guidance, we hope to continue to engage with Canadian regulators aimed at a thoughtful, comprehensive regulatory framework. We are confident that we will someday return to the market when Canadian users once again have the freedom to access a broader suite of digital assets.”
Binance’s History with Crypto Regulators
This strict regulatory climate in Canada is not a one-off show. Last year, the Ontario Securities Commission pulled its triggers on FTX, a globally known crypto exchange, and hedge fund. The watchdog ordered FTX to stop selling crypto assets and derivatives until further notice. The FTX episode finally concluded after chief executive Sam Bankman-Fried was later held for fraud and conspiracy in the United States.
On the other hand, Binance is also no stranger to regulatory scrutiny. Earlier this year, the U.S. Commodity Futures Trading Commission (CFTC) alleged that Binance violated derivative guidelines, the Commodity Exchange Act, and other CFTC regulations. It argued that Binance had intentionally violated the integrity of the American financial markets by offering products to retail and institutional customers without registering itself with the CFTC. However, founder Changpeng Zhao denied the allegations calling them a false representation of facts. He also hinted towards the possibility of Binance cutting ties with its partners in the U.S. including banks, service firms, token issuers, and venture capital investments.
Summing Up Binance’s Canadian Exit
The recent development involving Binance’s exit from Canada has somewhat slowed down BNB’s recent uptick. At the time of writing, BNB is trading at $314.95. Buyer momentum must increase to avoid a downward trend.
All in all, over the last year or so, the world’s largest cryptocurrency exchange has faced severe scrutiny, especially from a host of regulatory bodies and government agencies in the North American region. The proactive exit move from Canada is the latest development in Binance’s long-standing differences with regulators. With increased focus on regulating crypto markets across the world, it remains to be seen how Binance navigates these challenges to sustain its position as a global leader in the crypto space.
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