Two major exchanges have announced their exit from the Canadian market as the country imposes strict regulations on stablecoins and bans margin trading.
Dubai-based crypto exchange Bybit has announced that it will be exiting the Canadian crypto market.
In a May 30 blog post, the exchange stated: “It has always been Bybit’s primary objective to operate our business in compliance with all relevant rules and regulations in Canada. In light of recent regulatory development, Bybit has made the difficult but necessary decision to pause the availability of our products and services.”
The exchange will stop accepting new account opening applications from Canadian customers on May 31 at 8AM UTC.
Existing Canadian customers will have restrictions placed on their accounts starting from July 31, 8AM UTC. They will no longer be able to make new deposits, enter into new contracts, or increase their existing positions for any products or services. However, they will still have the ability to withdraw funds or reduce their current positions.
The exchange stated that Canadian customers who are affected by these measures need to take action before September 30 to wind down and manage their positions. If they fail to do so, any open positions they hold in margin products and derivative contracts will be liquidated, and the resulting funds will be available for withdrawal.
On May 29, Bybit received an approval ‘in-principle’ to operate in Kazakhstan at the Astana International Financial Centre (AIFC), where it’s likely to continue expanding.
The announcement comes two weeks after Binance, the worlds largest exchange by trading volume, also announced it will be exiting the Canadian market, citing the same regulatory difficulties.
What’s the situation in Canada?
Like the US, Canada has taken a less-than-favourable approach to cryptocurrency regulation.
In February, the Canadian Securities Administrators (CSA) issued a 21-332 notice outlining a set of requirements for Crypto Asset Trading Platforms (CTPs) like Binance and Bybit to operate legally in Canada.
The notice imposes several restrictions on custodial exchanges, including a ban on margin trading (where users borrow funds to trade with higher leverage), in addition to limitations on the number of investors that CTPs can serve.
Another restriction outlined in the notice is that CTPs must obtain prior written consent from the CSA for client purchases of stablecoins or proprietary tokens.
Announcing the exit, Binance tweeted: “Albeit a small market, [Canada] held sentimental value for us as the home country of our founder. 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.”
Canada isn’t entirely off the cards for Binance. The exchange stated it is “confident” that it will return to the market when they have the “freedom to access a broader suite of digital assets”.
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