On Sept. 30, cryptocurrency exchange Gemini, founded by Cameron and Tyler Winklevoss, notified its Canadian users that it would be shutting down its operations in Canada.
The unexpected move has triggered many questions about the reasons behind Gemini’s exit. At the same time, Canadian authorities have been tightening regulations on the crypto industry, prompting several exchanges to withdraw from the market.
What are Canada’s new crypto regulations, and why have some exchanges decided to leave the market? This article explores the key factors behind these developments.
CSA extends compliance deadline to Dec. 31
Gemini’s exit came just a few days after the Canadian Securities Administrators (CSA) released an update to crypto trading platforms (CTP) on Sept. 26 regarding stablecoins, referred to as value-referenced crypto assets (VRCA).
In the update, the regulator once again extended the deadline by which CTPs would no longer be allowed to offer stablecoins that do not comply with applicable terms and conditions by the CSA.
After initially requesting exchanges comply by April 30, 2024, the CSA moved the deadline to Oct. 31, citing technical issues in compliance. Subsequently, the regulator notified the public of another deadline extension on Sept. 26, requesting that CTPs comply by Dec. 31, 2024.
Source: CSA News
The extension aims to provide more time for CTPs to either comply with the terms and conditions of their registration or their pre-registration undertaking (PRU) or to propose alternatives that address investor protection concerns, the CSA wrote. It added:
“Even if a specific VRCA meets the terms and conditions of an applicable registration, exemptive relief decision or PRU, it does not mean the CSA approves or endorses the VRCA, endorses its safety, or that it is compliant with Canadian securities laws.”
Cointelegraph approached the CSA to provide a list of approved VRCAs in Canada but did not receive a response by the time of publication.
The CSA initially restricted the trading of stablecoins in December 2022, claiming that stablecoins may be categorized as securities or derivatives. The authority then clarified it may allow trading of certain stablecoins, subject to terms and conditions, including transparency and qualified custodian services.
What crypto firms are allowed to do business in Canada?
According to the CSA’s official records, at least 12 crypto exchanges are currently authorized to provide services in the country, with decisions from local regulators intact.
Those exchanges include Bitbuy Technologies, Coinbase Canada, Coinberry, Fidelity Clearing Canada, Netcoins, Newton Crypto, Shakepay, Wealthsimple Investments and others.
The CSA also provides a list of crypto firms that have filed for PRUs, including exchanges such as ByteX, Crypto.com, DigiFinex, Gemini, Kraken, NDAX, Satstreet and Uphold.
“Filing a PRU does not mean a platform will be granted registration,” the CSA noted, adding that PRUs still contain “important investor protection commitments” from unregistered crypto asset trading platforms.
Additionally, the CSA also provided a list of crypto firms that were banned in certain jurisdictions in Canada. The list, called “Banned crypto trading platforms,” includes companies like Catalyx, CoinEx Global, KuCoin, Poloniex, XT.com and LiquiTrade.
Coinbase pushed for presence in Canada in 2024
While Gemini decided to leave Canada, some exchanges, such as Coinbase, have been actively working to boost local presence.
In April 2024, Coinbase publicly announced plans to introduce a stablecoin tied to the Canadian dollar on its platform. The company previously secured a restricted dealer license in Canada, allowing it to operate there.
Source: Coinbase Assets
Coinbase’s entrance to Canada came just about a month before major rival Binance officially announced its departure from the country in May 2023. Binance specifically cited issues brought by the CSA’s rules that required the exchange to file for PRU and comply with new restrictions.
Related: Bank of Canada says no to retail CBDC in reshuffling of priorities
Several other crypto companies, including OKX, dYdX, Paxos and Bybit, also decided to exit Canada in 2023 amid changes in the regulatory environment.
Social media users speculated that the departures of exchanges like Binance could be linked to their use of stablecoins as main trading pairs. Others suggested that the departures could be due to the use of Tether’s USDt (USDT) and the now-defunct stablecoin Binance USD.
While many have linked USDt to regulatory issues in Canada, there is currently no official ban on the stablecoin’s use in the country. However, USDt is not allowed as part of the restricted dealer’s license, according to a statement by Netcoins. Major operating exchanges like Kraken and Coinbase delisted USDt from their Canadian platforms in 2023.
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