In a totally unexpected move, Binance tweeted that it will be shutting down its services in Canada following the latest changes in the North American country’s regulatory changes for cryptocurrencies.
Restrictions on Stablecoin and Investors
The cryptocurrency news has come as a surprise for many. According to an official tweet from the largest crypto exchange in the world, the management has decided to close up shop in Canada after an issuance of new guidelines by the Canadian Securities Administration. (CSA).
As per the changes by authorities, Canadian nationals are now prohibited to “enter into crypto contracts to buy and sell any crypto asset that is itself a security and/or a derivative.”
Per the ruling, this restricts crypto exchanges and other crypto financial services from offering several major cryptos, making it infeasible to operate from both a financial perspective and a techno-legal one.
Worse, the CSA classifies stablecoins as securities. Ever since the launch of the first stablecoin (USDT), these fiat-pegged crypto tokens have become a bedrock of crypto trading, allowing people to cash out their profits or hedge their losses without the need to liquidate their assets into fiat.
Not the First Crypto Exchange to Pull Out
Binance is not the first crypto service that has decided on terminating their services in Canada. The cryptocurrency technology area is full of exchanges that have already shut down their Canadian arm.
OKX has already left Canada in March this year. The next month in April, the decentralized crypto exchange dYdX and fintech firm Paxos followed suit.
In the tweet, Binance made it clear that it did not agree with what was happening in the country, but respected the regulators and will comply,
“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”
The new regulations had been around since February this year and as per Binance’s clarification, it had already applied for a new pre-registration undertaking but it found it difficult to continue.
The crypto exchange has said that there is sufficient time for Canadian users to act accordingly. Binance has advised all users to close their positions by 30th September this year. Following that day, all open positions will be liquidated, with users only able to withdraw their remaining funds.
Binance has also said that it will continue to keep in contact with Canadian regulators to help develop a crypto framework that is fruitful for citizens and the industry.
Cryptocurrency Woes for Canadians
The cryptocurrency technology news out of Canada in recent times has nearly always been about either restrictions or other forms of hurdles.
Binance was already on a path to limited operations in the North American country. It had already closed operations in Ontario last year after months of compliance issues with the provincial regulators.
But it seems this time, Binance’s issues are now nationwide.
Binance North American Issues Vs Global Acceptance
Of the many cryptocurrency technology news that grace the media, Binance’s is perhaps the most polarizing. It already has an independent entity in the United States, Binance.US to cater the complex and different regulatory requirements of the country.
Binance has been accused of bypassing and not complying with regulatory issues there, something it denies. Binance.US also faced on and off ramping issues following the collapse of Silvergate and Signature Bank.
But finding a new bank has been a tough road for the largest crypto exchange. With the end of 2022 causing massive upheavals in the industry, banks are more and more shying away from servicing crypto firms.
On the other hand, Binance is thriving in other locations across the globe. It has achieved operations licenses in countries like Dubai, Kazakhstan and Japan. The reason for success in some countries and struggles in others point towards not an internal issue or policy per say, but more likely on the regulations and the friendliness of the nation.
Dubai, Kazakhstan and Japan are some of the most crypto friendly nations with banks having no issues in servicing crypto related operations – as long as they are compliant.
This puts a big question mark on the Canadian crypto industry. At one time, the country was extremely friendly, with the first ever Bitcoin ETF approval. However, it seems it is taking a reverse decision on all the progress it had made.