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“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 in a tweet, adding that it was “proactively withdrawing from the Canadian marketplace.”
The platform, founded by Canadian national Changpeng Zhao, said it would send its remaining Canadian users emails explaining how the withdrawal will affect their accounts. A person familiar with the matter described the process as a wind-down.
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Binance feuded publicly with Canada’s largest provincial regulator, the Ontario Securities Commission (OSC), in late 2021. The crypto platform assured users it could operate in the country’s most populous province despite having said earlier it would withdraw rather than comply with a new requirement to register with the Ontario regulator.
The OSC said registration was required and hadn’t occurred. Binance ultimately signed a legally enforceable undertaking in March of 2022 committing to the OSC that its activities involving Ontario residents had ceased — aside from those expressly “permitted actions to protect investors” — and that it would prevent any further activities.
By the end of 2022, following the spectacular collapse of crypto platform FTX Inc., a dozen securities watchdogs from the other provinces and territories joined the OSC in taking a harder line, requiring registration and other rules for digital currency players.
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Among the requirements is a pledge that Canadian client assets will be held with an appropriate custodian and that these assets will be segregated from the platform’s proprietary business.
Crypto platforms are also prohibited from offering margin or leverage for any Canadian client under the rules unveiled in December 2022 by the Canadian Securities Administrators (CSA), an umbrella organization for the country’s 13 provincial and territorial watchdogs.
Crypto regulation
The regulators made clear that platforms located outside Canada that are accessible to Canadians — such as Binance, which was founded in Shanghai in 2017 and has a holding company in the Cayman Islands — will be regarded as operating in Canada for the purposes of securities regulation.
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In addition, the CSA laid out new rules for stablecoins to ensure compliance with rules for derivatives and their use by retail investors.
Binance said that while it does not agree with the new rules, the company hopes to continue to engage with Canadian regulators on a “thoughtful, comprehensive” regulatory framework. The firm did not rule out “someday” returning to the country — if “Canadian users once again have the freedom to access a broader suite of digital assets.”
“We would like to thank those regulators who worked with us collaboratively to address the needs of Canadian users,” Binance said it its tweet.
The OSC’s firm approach to crypto regulation over the past few years included tangling with FTX behind closed doors and ordering the firm to immediately halt the sale of crypto assets and derivative products to all Ontario retail investors until it was properly registered or obtained restricted dealer status, according to sources.
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This limited the fallout in Canada’s largest province from the November 2022 collapse of FTX, whose former chief executive Sam Bankman-Fried was later charged with fraud and conspiracy in the United States. Sources familiar with the matter estimate the platform had more than 30,000 users in Canada when it imploded following a run on crypto assets that revealed a significant shortfall of funds.
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The Ontario regulator’s harsher stance on cryptocurrency can be traced back to the 2019 collapse of QuadrigaCX, a large Canadian crypto player with about 40 per cent of its 76,000 clients in the province.
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