Binance leaving Canada – impact on crypto industry?

Key Takeaways

  • Binance, the world’s biggest crypto exchange by volume, announced that it was leaving Canada due to new regulatory changes in the nation.
  • Canada is a small market, but the departure of Binance and other crypto firms amplifies growing concerns that the industry will have no choice but to move offshore.
  • The regulatory clampdown in Canada and the US is concerning for the crypto industry, as US regulators are closely watching the developments in Canada.

Binance’s departure from the Canadian market is not a big issue in itself, as Canada represents a small market. However, the developments are concerning as they come amid a broader regulatory clampdown in the US. Binance is already under pressure via multiple investigations and complaints in the US, and the most notable is a civil enforcement action filed by the Commodity Futures Trading Commission.

SEC tighten screw

The intense regulatory crackdown in the US includes the blockchain and the SEC engaging in an ongoing war of words. The exchange has repeatedly lamented what it perceives as a lack of regulatory clarity by lawmakers. Chairman of the SEC, Gary Gensler, has asserted that “the rules have already been published” and that “there’s nothing about a new technology (such as crypto) that makes it non-consistent with the public policies that Congress has laid out”.

What happens next for cryptocurrencies?

Therefore, even though Binance’s departure from the relatively small Canadian market may not be significant on its own, industry participants should be concerned about what this signifies going forward. It is the most recent regulatory setback in North America, and it seems like the industry is being pushed overseas.

While cryptocurrency is a technology that can theoretically function anywhere, the United States is the world’s largest financial market, and forcing companies to relocate overseas – and making it more inconvenient for customers to access the blockchain world – is not good for the industry.

Blockchain is often promoted as a way to circumvent the conventional financial world. Despite the fact that this is attractive to some, it is also the reason why it is getting in trouble with regulators (predictably). Furthermore, while some forms of crypto provide a more censorship-resistant and smoother method of transferring money and storing wealth, people still need to access it from the fiat world in the first place. They also need to repeatedly convert between the two to withdraw money because the world still pays for goods and services such as food, water, and housing in fiat currency. This is why limiting crypto exchanges and other onboarding channels in the United States is a major problem for the industry’s goal of establishing itself in the mainstream.

As a result, the notion that crypto can overlook these regulatory concerns or move overseas without consequences may be missing the mark. The ongoing regulatory crackdown in North America is becoming a crisis for the cryptocurrency industry. Binance’s expulsion from Canada is only the most recent example of this.