The reason behind the decision to leave the Canadian market was not revealed by Bitstamp. Notably, the exchange follows Binance, OKX, and Bybit which announced their exit from Canada earlier.
Luxembourg-based crypto exchange Bitstamp is planning to stop providing services in the Canadian market in January 2024. The deadline for withdrawing customers’ funds is January 8. Afterward, Bitstamp will deactivate Canadian users’ accounts.
The announcement was shared by Bobby Zagotta, Bitstamp’s US CEO and Global Chief Commercial Officer:
“After initially informing our valued customers in March, Bitstamp will officially discontinue its services to customers in Canada starting Jan. 8, 2024. As a result, all Canada accounts will be closed and customers will no longer have access to their accounts.”
“This is not a decision we took lightly, and we thank our Canadian customers for their loyalty over the years. We hope to be able to serve Canada again at some point in the future,” added he.
Previously, Bitstamp also shed its Ethereum (ETH) staking service for United States customers due to regulatory constraints. In particular, the United States Securities and Exchange Commission (SEC) has long been on a warpath against staking, saying it meets the criteria of investment contracts under the Howey Test. The latter acts as a litmus test to ascertain whether a transaction or investment meets the definition of a security. Consequently, investments falling into the securities category are subject to specific regulatory guidelines. This becomes particularly relevant given that many cryptocurrencies remain unregistered as securities.
Canada Tightening Crypto Trading Regulation
The reason behind the decision to leave the Canadian market was not revealed by Bitstamp. Notably, the exchange follows Binance, OKX, and Bybit which announced their exit from Canada earlier. Crypto firms Paxos, Blockchain.com and Deribit announced their departures as well. All of them stopped operating in Canada several weeks after the country revealed new crypto company guidance. To continue operations, the Canadian authorities mandated crypto trading platforms to secure Canadian Securities Administrators (CSA) approval.
The new regulatory guidance proposed by the authorities claims that the CTPs in Canada should be a part of the new version of preregistration undertaking (PRUs), which are legally binding manuscripts. Principal regulators will then reach out to these CTPs to discuss compliance with the new requirements.
In addition, the Crypto asset trading platforms were forbidden from allowing clients to trade and deposit stablecoins, or any other type of “Value Referenced Crypto Assets” (VRCAs), without the CSA’s prior written authorization.
When leaving, Binance commented:
“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.”
“While our platform will no longer support Canadian customers in the immediate term, we will reassess our presence in this region in partnership with our clients’ evolving needs,” wrote Paxos.
Meanwhile, Canadian authorities were explaining their decision by the need for protection when trading securities or derivatives, as well as principles of fairness, efficiency, and innovation in the markets.