- Technical Issues Delay Compliance
- Crypto Exchanges Leave Canada
- Alternative Approaches and Implications
Canada’s financial regulatory body, the Canadian Securities Administrators (CSA), announced an extension of the deadline for compliance with new stablecoin rules and regulations to December 31.
Technical Issues Delay Compliance
The initial deadline was on April 30, then it was changed to October 31, but now the new deadline is set at December 31. In early 2023, the CSA introduced restrictions on value-referenced crypto assets (VRCAs). The regulations prohibit any stablecoin that is not backed by single fiat currencies. This means algorithmic stablecoins like DAI do not follow the CSA’s rules. The CSA allowed crypto exchanges to offer stablecoins backed by single fiat currency (FBCAs) until it activated the rules on April 30.
Crypto Exchanges Leave Canada
Many crypto exchanges stopped serving Canadian citizens and residents and decided to leave. This is due to difficulty in meeting Canada’s regulations. Exchanges such as Binance, OKX, and KuCoin stopped their operation during the past two years. In late 2023, Binance put all Canadian customers into liquidation mode. OKX sent an email to Canadian users saying that it will no longer provide them services or allow them to create new accounts. KuCoin was banned by the Ontario Securities Commission (OSC) in 2022. On the other hand, Kraken, Coinbase, and Gemini decided to stay in Canada. Kraken filed a Pre-Registration Undertaking (PRU) with the OSC back in 2023, attaining a restricted dealer status. Gemini and Coinbase are operating in Canada as restricted dealers as well.
Alternative Approaches and Implications
The Canadian government body stated that it is willing to consider other approaches for achieving or applying the rules and regulations. Additionally, the CSA stated that it’s open to alternative proposals that protect investors as long as they are in place and prior to the new deadline.
After December 31, 2024, registered CTPs or CTPs that provided a PRU can only offer VRCAs that comply with the conditions of their registration and exemptive relief decisions, or their PRUs.
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