Crypto giant Binance has pulled the plug on its presence in Canada, citing the country’s new legislation over investment limits and stablecoins.
Securities regulators in Ottawa issued a 30-day deadline in February for unregistered crypto trading platforms to sign up to a ‘pre-registration undertaking’ requiring them to follow tough regulations on customer assets.
The sudden toughening up of rules – similar to the recent actions of the US – has seen several crypto operations withdraw from the Canadian marketplace. But few will carry the gravity of Binance’s decision to leave.
The world’s largest cryptocurrency exchange was today already lamenting its withdrawal from Canada, particularly as it is the home nation of its founder, Changpeng ‘CZ’ Zhou.
“We had high hopes for the rest of the Canadian blockchain industry. 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,” a company statement said.
“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. Our remaining Canadian users are receiving an email with comprehensive information on how this will impact their accounts going forward.
“While we do not agree with the new guidance, we hope to continue to engage with Canadian regulators aimed at a thoughtful, comprehensive regulatory framework. 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.”
The move comes only days after one of Binance’s most senior figures revealed the exchange was becoming increasingly frustrated with US regulators’ attitude towards digital assets.
Speaking at a digital asset summit in London on Wednesday, the firm’s chief strategy officer Patrick Hillmann pledged his company would now do “everything we possibly can” to become fully regulated in the UK.
Hillman described how “the US right now is in this weird place” adding it had “been very confusing over the past six months”.
It is understood Changpeng Zhou has grown disenchanted with the US, and was now turning his focus on London as Hillmann declared the US was a “very difficult” place for the crypto industry.
Uncertainty over the digital asset industry in the United States has been rumbling for several months, but more acutely since the Securities and Exchange Commission began probing rival exchange Coinbase.
More recently, President Joe Biden even waded in by pledging a heavy 30 per cent tax levy on the energy used by cryptocurrency miners.
The exchange has, in the past, made a handful of attempts to be given the green light to operate in the UK, but its intentions were rebuffed a couple of years ago by the Financial Conduct Authority.
Eyebrows were raised in Endeavour Square when FCA chiefs claimed Binance was incapable of being regulated after providing inaccurate data about its business activity. The authority also took a dim view of Binance’s ‘no fixed abode’ approach when it came to its global headquarters.
However, it is widely believed the UK government and the FCA’s previously hard-line stance on cryptocurrency has softened since 2021 – a thawing that could pave the way for Binance to turn its back on the US and focus on the UK instead.
Hillmann was pressed at the FT-run conference on whether or not Binance had resubmitted an application, but he declined to answer.
While many crypto commentators have been quick to acknowledge the UK’s finance bodies were warming to DeFi organisations, the opposite can be said of their US counterparts.
Several crypto companies have been on the receiving end of blatant warning shots across the bows from US regulators, with Binance and Coinbase taking the most fire.
Hillmann did, however, concede some degree of hope that the current stance of the United States might change in the future.
“I expect at some point the US is going to want to pivot and play catch-up to Europe which just passed Mica (an EU crypto legislation framework), which is a huge step forward,” he said.
Meanwhile, regulation specialists in the UK have been quick to express a lack of surprise over Patrick Hillmann’s comments earlier today.
Sushil Kuner, a principal associate at international law firm Gowling WLG said the UK’s current attitude towards digital assets made it an attractive prospect.
“It is no surprise that firms operating in the crypto sector are seeking regulatory certainty,” the lawyer said.
“The UK has set out its ambitions to be a global crypto hub and is working hard to adopt a proportionate approach to the future regulatory framework for crypto assets in the UK, as set out in HMT’s recent consultation paper. Certainty is paramount in the current environment for crypto asset businesses and their investors and the UK certainly seems to be more attractive for them right now.”
Dom Kwok, COO and co-founder of blockchain and Web3 app EasyA, suggested Binance’s position with US lawmakers could hand a gift to the UK.
“Given Rishi Sunak’s ambition to make Britain a ‘global hub for cryptoasset technology’ and the increasingly difficult regulatory landscape of the US, the news from Binance could suggest a new technological dawn for the UK market,” he said.
“While the US is hamstrung by indecision over how to handle the cryptocurrency market, the UK has a chance to shine – welcoming crypto exchanges to the UK.”
