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Binance is Latest Crypto Exchange to Shutter Operations in Ontario

The Ontario Securities Commission (OSC) is once again cracking down on non-compliant cryptocurrency exchanges. In the event that exchanges do not comply with the wishes of regulators, fines and other penalties may apply.

In the case of Binance, they have until December to formally shut down their operations in Ontario. Binance is among other cryptocurrency exchanges that have been on the receiving end of the regulatory bludgeon from the OSC.

KuCoin, and ByBit have also received notices to cease operations in Canada’s largest province. Canadians living inside and outside of Ontario are left with more questions than answers with respect to what the future holds for their trading, and investment activity.

Binance has decided to end its operations in Ontario, Canada

Will Other Provinces Follow the Lead of Ontario?

With the exception of British Columbia, and Quebec, the other eight provinces in Canada typically follow the lead of the Ontario Security Commission. Canada has no federal body for regulating securities, and so each province must come up with the legislation that makes the most sense for them.

This is unlike the SEC in the United States, which is a federal body, and has nationwide authority. I personally live in Nova Scotia, one of the smaller Canadian provinces located on a peninsula on the east coast. One massive question I have for the Nova Scotia Securities Commission is whether or not they will follow Ontario in shutting down the use of exchanges within the province.

If I were to speculate on the matter, I have a feeling they will. Nova Scotia rarely demonstrates political or regulatory autonomy, and many other Canadian provinces are the same.

Creating a Welcome Environment

Regulatory crackdown ultimately creates an non-cohesive environment for many people or businesses wishing to start a project. Regulations increase the barrier to entry for even getting your product or cryptocurrency to market. The average individual or startup now needs the backing of a legal team, or institutional investors in order to get through the plethora of legal paperwork required to pass the regulatory requirements. Simultaneously, the regulations are also supposed to protect investors, and I admit, this is a much needed addition to the cryptocurrency space. There are plenty of scammy projects that fall into the category of being a rug-pull or ponzi scheme. So where is the middle ground?

The middle ground lies somewhere between reasonable regulations, subsidizing the cost of working with lawyers, and expediting the application and review process. When my company Atlantic Blockchain was conceptualizing a real estate tokenization project, we visited the Nova Scotia Securities commission. We discovered that the process of applying, and working with the regulator would be a multi-year process with many visits to our lawyer. In the end, there would be no guarantee that our application would succeed, and we would be able to undertake the project we had in mind.

The Cost Outweighs the Benefit

Rather than fight or comply with the regulations, Binance has decided to pull out of the region entirely. What the regulators may or may not realize, is that conforming to regulations is a huge cost to Binance. The engineers at Binance would need to modify their platform, and the user experience in such a way that limits the default functionality of the site. There may be entirely new data collection requirements, which come with obligations to protect it. All of this additional cost, at a time when Binance is experiencing massive growth in other parts of the world.

Ontario is home to 15 million people, with approximately 500,000 of them owning cryptocurrency. Some subset of that population likely uses Binance. Needless to say, there is little justification to pour resources into complying with regulators for such a small population.

Binance on Receiving End of Regulatory Crackdown

Ontario is not the only place that has served Binance a notice to cease operations.

Most recently the UK, and Japan have also taken a closer look into Binance’s operations. The crux of these crackdowns come from a claim that Binance is not complying with AML requirements by listing projects with sketchy fundamentals. If this is really the case, then virtually every single cryptocurrency exchange needs to cease operations as sketchy projects are a dime a dozen.

Binance, a Highly Respected Exchange

It is worth mentioning that Binance is one of the most respected, and diligent cryptocurrency exchanges in the world. They have done much to give their user base a safe, and secure user experience. Binance Academy is one such example of giving users a trustworthy educational resource for trading, and acquiring cryptocurrencies. Additionally, before playing with advanced financial instruments such as margins and derivatives, one must pass a test indicating that you are aware of the risks that you are taking on.

It worries me that such a reputable exchange such as Binance is on the receiving end of a regulatory crackdown. If Binance is susceptible to crackdown with all of their merits, and work they’ve done to decrease users exposure to risk, then what is stopping regulators from cracking down on the rest of the industry? As far as I can tell, Binance is not the easy target, which only means that there are plenty of other exchanges that may be next on the chopping block.

What To Do If Your Exchange is Being Shut Down

There are really only a couple of things that you can do if you find yourself with an account on Binance or one of the other exchanges that are being shut down. Move your funds. It may be difficult to find an exchange that complies with each and every regulation out there, so be prepared to make a couple of moves if the crackdown heats up.

At present, this crackdown may start to look like a game of hot potato as users take their funds from one platform to another. At the same time all of this regulatory action is taking place on centralized exchanges, it is bolstering the value proposition for the DeFi movement. In theory DeFi makes anything and everything the regulators decide to do, obsolete.

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About the Author

Keegan Francis

Keegan Francis is a cryptocurrency knowledge expert and consultant. He recognized the opportunity in cryptocurrency early in his career and has been invested in it since 2014. His passion led him to start the Go Full Crypto, a project that documents his journey of totally opting out of traditional financial services. Keegan has been living entirely off of cryptocurrencies since 2019.

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