Binance leaves Canada in the face of new cryptocurrency restrictions

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Only weeks after the nation established a number of new rules for cryptocurrency exchanges, including investor limitations and required registrations, Binance said on Friday that it was leaving Canada.

With the establishment of a pre-registration procedure, Canada has recently tightened laws for sites that trade crypto assets. The Ontario Securities Commission’s website states that companies that break the laws may be subject to enforcement action.

Cryptocurrency exchange Binance stated in a tweet:

Unfortunately, (the) new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market not longer tenable for Binance at this time.

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

Binance stated that it disagrees with the most recent recommendations and that it intends to cooperate with Canadian regulators to develop a thorough framework for crypto operations there.

According to the cryptocurrency exchange, established by Canadian Changpeng Zhao, “We are confident that we will someday return to the market when Canadian users once again have the freedom to access a wider suite of digital assets.”

In a detailed, heartfelt email to its Canadian customers that it sent on Friday, Binance states:

Dear Binancian,

We regret to inform you that Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace. Albeit a small market, it held sentimental value for us as the home country of our founder. 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 Canada market no longer tenable for Binance at this time. We put off this decision as long as we could to explore other reasonable avenues to protect our Canadian users, but it has become apparent that there are none.

The choice to leave represents a reversal of the company’s former action.

Its Canadian affiliate submitted the necessary paperwork to commit to registration back in March. Other businesses, such as Coinbase Global Inc., Kraken, and Gemini, have hinted that they want to apply for registrations in the nation.

Other players that left Canada

Canadian securities regulators issued unregistered crypto trading platforms operating in the nation a 30-day deadline in February to commit to registration or leave. Companies must adhere to stricter rules on the segregation of customer assets, and it is forbidden to provide users with leverage or margin in Canada.

Users cannot be offered stablecoins by companies that are registering without the regulators’ prior approval.

Due to the changed regulatory environment, other crypto companies have left Canada, among which OKX, Paxos and dYdX. Major exchange Bittrex also pulled out of Canada in July of last year, citing regulation as the main reason. It appears that Canada regulatory arena is beginning to resemble more and more that of its neighbor, the United States, that makes it increasingly difficult for crypto companies to operate there.

The collapse of Binance rival FTX in November, which led to a market crash in the prices of the main digital coins, has put the digital assets industry in the sights of regulators all over the world.

Tighter regulations for disclosures on how the crypto companies operate and retain customer cash were required by politicians and securities regulators after the crypto winter of 2022, which erased more than a trillion dollars off the industry’s market worth.

The U.S. Commodity Futures Trading Commission sued Binance and its CEO Zhao in March for running what the regulator claimed was a “illegal” exchange and a “sham” compliance program.

It has been an increasingly difficult environment for crypto firms in general, and exchanges in particular, to survive. However, it may turn out that the winners of the game will be those countries that have the right regulations in place, that strike the balance between protecting the crypto users while allowing enough freedom for crypto businesses to thrive and expand.

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