Coinbase, a prominent cryptocurrency exchange, has recently announced its decision to suspend trading of certain stablecoins for Canadian users starting from August 31. This development comes as part of Coinbase’s ongoing efforts to ensure that the assets listed on its platform align with its stringent listing standards. In an email notice circulated on August 17, the exchange informed its users about the impending suspension of trading activities involving Tether (USDT), DAI, and RAI stablecoins in Canada. The discontinuation of trading for these stablecoins will take effect in September.
It’s important to note that despite the suspension of trading, Canadian users will still retain the ability to deposit and withdraw these stablecoins even after the specified deadline. Coinbase clarified in a statement that its Canadian arm, Coinbase Canada, Inc., has submitted an application for regulatory registration in specific Canadian jurisdictions. While the registration has not been finalized yet, Coinbase Canada, Inc. has pledged to adhere to the terms of a legal undertaking during this interim period.
This development echoes a broader trend within the cryptocurrency industry in Canada. Earlier this year, Crypto.com, another digital asset exchange, opted to delist USDT for Canadian users. The catalyst for such actions can be traced back to the Ontario Securities Commission’s decision to ban USDT in 2021. Notably, the rationale behind this ban was not explicitly elucidated. Subsequently, on February 22, the Canadian Securities Administrators (CSA) published a notice that mandates registered or pending crypto exchanges to enter into legally binding undertakings with the regulatory body.
Coinbase and other cryptocurrencies adoption in Canada
One salient requirement of this undertaking involves prohibiting crypto asset trading platforms (CTPs) from facilitating the purchase or deposit of Value-Referenced Crypto Assets, commonly known as stablecoins, through crypto contracts without obtaining prior written consent from the CSA. The CSA’s regulatory stance seems to align with its emphasis on consumer protection and the maintenance of market integrity.
Tether, the most well-known stablecoin, is backed by fiat reserves. DAI, on the other hand, functions as a hybrid stablecoin, combining elements of both fiat and algorithmic stability mechanisms. RAI stands apart as an algorithmic stablecoin that does not rely on pegging to any specific underlying asset. In the current Canadian regulatory landscape, the only stablecoin granted approval by the CSA for listing on centralized crypto exchanges is USD Coin (USDC).
As a result of these new regulatory developments, several crypto exchanges have taken significant steps. For instance, OKX, a notable exchange, withdrew from the Canadian market in June. Similarly, Binance, another major player in the cryptocurrency exchange space, has announced its intention to exit the Canadian market by September.
