Binance, the world’s largest cryptocurrency exchange, has announced that it is “proactively withdrawing from the Canadian marketplace” citing an increasingly challenging regulatory environment.
This comes as regulatory barriers continue to hit the Changpeng Zhao-led crypto firm in North America, including the new guidelines from the Canadian Securities Administrators (CSA) that restrict stablecoin sales.
Binance has recently been at a disadvantage in the country being outmaneuvered by other top crypto exchanges in Canada such as Kraken, Coinbase, and Crypto.com. The Cayman Islands-based digital asset trading platform had earlier agreed to cease its operations in Ontario.
Canadian Regulatory Guidelines “No Longer Tenable” – Binance
On Friday, May 12, Binance announced in a Tweet that it will be winding down its operations in Canada.
The crypto exchange attributed its decision to terminate its services to Canadian users to the new government “guidance related to stablecoins and investor limits” saying that they made the “Canada market no longer tenable” for its operations.
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
The statement said that Binance had collaboratively worked with regulators “to address the needs of Canadian users” and that the firm “had high hopes for the rest of the Canadian blockchain industry.” It added:
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.
The guidelines Binance is referring to are the ones released by the Canadian Securities Administrators (CSA) in February.
The guidance has investor protection provisions and prohibits crypto asset trading platforms within the country from allowing customers to buy or deposit stablecoins without the agency’s approval.
Obtaining prior approval from the CSA would require the crypto trading platform to pass the regulator’s various due diligence checks. It is widely believed that the guidelines target offshore companies like Binance that serve Canadian clients.
This is because, the CSA required crypto exchanges to separate digital assets held by Canadian residents, among other commitments. It also imposed a ban on margin or other forms of leverage.
In its announcement, Binance pointed out that it did not agree with the new guidelines, but still hopes to “continue to engage with Canadian regulators aimed at a thoughtful, comprehensive regulatory framework.”
The Canadian Market Has “Sentimental Value” To Binance
The decision to exit the Canadian market appears to have been especially difficult for Binance. An excerpt from the Tweet reads:
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.
Binance said that although the Canadian market represents one of its smaller markets, “it held sentimental value for us as the home country of our founder.”
Although Binance co-founder and CEO Changpeng Zhao, also known as CZ, was born in China, he emigrated to Canada at a young age and now holds Canadian citizenship.
In finishing Friday’s announcement, Binance said:
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.
Earlier, the crypto exchange had entered into an agreement with the Ontario Securities Commission (OSC) to stop operations in the country’s most populous province.
According to the agreement, Binance assured the OSC that it would put measures in place to prohibit trading activity within Ontario, or by Ontario-based users.
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This article was written for Business 2 Community by Nancy Lubale.
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