In terms of sheer trading volume, Binance is the largest cryptocurrency exchange, but it’s heading towards the exit in the Canadian market.
The news comes as regulatory measures in Canada are forcing the exchange to think twice about its position in that regional market. Per a Coindesk report, the Canadian Securities Administrators (CSA) revealed new measures that relate to stablecoins.
These coins were meant to mimic fiat currency by tracking, say, the U.S. dollar. Now the CSA is requiring exchanges to obtain CSA approval prior to customers buying or depositing stablecoins. Binance would have to undergo a pre-registration process along with a normal registration process within a 30-day window.
One of the primary features of stablecoins and cryptocurrency in general is its ability to allow customers to make transactions quickly and effortlessly. Adding an extra layer of CSA regulation could potentially slow down that process and undermine cryptocurrency’s ability to operate without government oversight.
Per another Coindesk report, exchanges “will have to abide by custody rules, which discuss segregating crypto assets held for local clients, a ban on margin or other forms of leverage and a ban on selling stablecoins without the CSA’s permission.” That regulation comes as certain stablecoins within the past year have seen heavy market fluctuations and collapses, particularly in 2022 when a heavy sell-off was occurring in the crypto market.
However, if cryptocurrency is to grow and compete with tangible assets in the traditional financial market, some form of regulation is necessary. The crypto market has grown so much that it can no longer fly under the regulatory radar. However, as shown in Binance’s decision to exit the Canadian market, some big players may not be able to keep up.
Canadian Crypto Market “No Longer Tenable”
All in all, the cost of regulation is ultimately there to protect retail investors, according to the CSA. Aforementioned collapses of stablecoins have forced the CSA’s hand. Pending regulation from other markets could be forthcoming as this situation continues to play out.
“Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada,” said CSA Chair Stan Magidson.
“We had high hopes for the rest of the Canadian blockchain industry,” the exchange said in a tweet. “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.”
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
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