Binance has become the latest crypto company to depart Canada amid regulatory concerns. Canada is a small market but US regulators have also clamped down severely, amplifying the growing concern within the industry that crypto will have no choice but to move offshore.
In a statement on Twitter, Binance said that “new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time.” Canada held “sentimental value for us as the home country of our founder (CEO Changpeng Zhao)”.
Binance is not the first crypto firm to abandon the Canadian market. In February, the Canadian Securities Administrators (CSA) published new expectations around the registration of crypto platforms in the country, specifically around the requirement to file preregistration undertakings. Fellow exchange OKX withdrew from the Canadian market within a month, followed by the decentralised exchange dYdX and Paxos.
Pulling out of the Canadian market should not be a big issue in itself. As Binance says in its tweet, the nation represents a “small market”. Nonetheless, the developments are concerning as they come amid a broader regulatory clampdown in the US. South of the border in the US, the crypto industry is at war with regulators, and Canada’s unaccommodating stance won’t help things.
Binance itself is already under pressure via multiple investigations and complaints in the US. Chairman of the SEC, Gary Gensler, has asserted in a speech at the Financial Markets Conference in Atlanta that “the rules have already been published”. He added that “there’s nothing about a new technology (such as crypto) that makes it non-consistent with the public polices that congress has laid out”.
The comments follow a testimony in April before the House of Representatives Committee on Financial Services that slammed the crypto sector for mass non-compliance. Coinbase and the SEC have been engaged in an ongoing war of words, the former threatening last week to use the UAE as an international hub amid the growing hostility in the US.
Therefore, while Binance abandoning the relatively small Canadian market may not be the biggest blow in isolation, industry participants should worry about what this signals going forward. It amounts to just the latest regulatory blow in North America, and it feels like the industry is very much being pushed overseas. While cryptocurrency is technology and can theoretically operate anywhere, the fact of the matter is that the US is the biggest financial market in the world, and pushing firms abroad – and making it far more inconvenient for customers to access the blockchain world – cannot be good for the space.
Blockchain is often advertised as a way to circumvent the traditional finance world. As seductive as that sounds for some, it is also the reason it is landing itself in hot water with authorities (unsurprisingly). Additionally, while branches of crypto may offer a more censorship-resistant, smoother way to shift money around and store wealth, people still need to access it from the fiat world in the first place. They also need to repeatedly bridge between the two to withdraw money, because the world is still paying for food, water, housing and every other good and service in fiat. This is why restricting crypto exchanges and other onboarding avenues in the US is a big problem for the industry’s hopes of establishing itself in the mainstream.
So the argument that crypto can brush aside these regulatory issues, or seamlessly move abroad without impact, may be missing the point. The continued crackdown from regulators in North America is becoming a crisis for the crypto industry. Canada’s expulsion of Binance is just the latest story highlighting that fact.