Committing to Canada in the Wake of Hostility South of the Border – Which Exchanges Plan a Growing Presence?

It is no secret that the Biden administration and various regulators within the United States are working hard to keep the digital asset sector in check.  These efforts have most recently culminated in various enforcement actions being levied against market giants like Coinbase, Kraken, Binance, and more.  With these actions coming amidst a banking crisis that saw multiple banks fail, many are wondering just how far the powers-that-be will go to limit on/off ramps within the nation.

Naturally, with Canada and the United States being more intertwined and reliant upon one another than arguably any other pairing of nations around the globe, fears among Canadian investors have also been stoked as they wonder if similar actions will take place north of the border.

To this end, multiple of these large exchanges have taken the time this week to allay these fears, sharing an intent to double down on their commitment for expansion in Canada by joining Crypto.com in filing for a ‘pre-registration undertaking'.

Coinbase

Of all the enforcement actions taken over the past few weeks, one of the most surprising involved Coinbase.  As a publicly traded entity that claims to have been in constant contact with regulators, it was thought that the level of transparency and cooperation on display would allow the company to at least be given the benefit of the doubt.

This was not the case though, as the SEC surprised the exchange with charges stemming from the Coinbase staking program, alleging that the platform was offering unregistered securities.  Needless to say, Coinbase was not impressed and shared a strongly worded response indicating that it will fight tooth-and-nail in court to prove the SEC has been acting in bad faith when it states that companies just need to come in and register.

With all this happening, Coinbase took the time to share information on its renewed efforts within Canada, stating that “On Friday, March 24th, Coinbase Canada signed an enhanced Pre-Registration Undertaking (PRU).”  Upon doing so, Coinbase notably took the time to thank Canadian regulators for their ‘efforts to bring clarity to the industry' and that the company looks ‘forward to continuing [its] collaboration with them on regulation that protects consumers while embracing innovation'.  While this may be true, it is also a clear jab at the SEC.

Overall, Coinbase states that,

“We believe Canadians are eager to access the benefits of cryptocurrencies, and we are excited to be able to provide them with a trusted platform to do so. With our expansion into Canada, we are one step closer to realizing our mission of creating an open financial system and increasing economic freedom across the globe.”

At a time when Canadians are struggling with inflation, sky-high housing costs, and a litany of other financial stressors, it is always a positive to see companies creating skilled jobs.  To this end, Coinbase notes that its Canadian team already numbers 200+.

Kraken

Not to be left behind by Coinbase, Kraken has announced similar plans of its own this week that will see it expand operations throughout Canada.  Upon sharing its filing of a pre-registration undertaking, the exchange stated,

“Given the additional work required to obtain a regulatory license, some global exchanges have restricted or stopped offering services to Canadian clients. Kraken, however, is committed to supporting Canada as a cornerstone of our global business. In fact, we are proud to currently employ 250 Canadians who are all working hard to bring financial freedom to clients in their home jurisdiction!”

Kraken also went as far as elaborating on why it is planning on further expansion in Canada, noting that the nation is ‘quickly becoming a major player in the crypto market'.  It based this statement on the fact that 13% of Canadians already own digital assets, while another 31% plan on entering the market in the coming months.

With a population of ~39,000,000, this could potentially equate to over 17,000,000 market participants in need of reliable services before the calendar flips to 2024.

Existing Competitors

While Coinbase and Kraken may be expanding their efforts in Canada, the pair will by no means be operating without competition.  With impositions by Canadian regulators already resulting in various companies like KuCoin, Bittrex, and others being ousted from offering services to many Canadians, it has allowed for a few home-grown exchanges to gain a strong foothold on the market.  The following is a list of companies that have already gone through registration procedures and are authorized to do business in Canada.

• Bitbuy
• Bitvo
• Coinberry
• Coinsquare
• Fidelity
• Netcoins
• Newton
• CoinSmart
• VirgoCX
• WealthSimple

As of now, the only exchanges to be outright banned by the CSA are KuCoin and Poloniex.

Final Word

As it stands, there are no shortage of exchanges for Canadians to access.  However, a variety of those already dealing with low-volume may struggle with the expanded efforts of both Coinbase and Kraken, as the pair will no doubt be able to offer more streamlined, reliable, and versatile services through their respective platforms.

Notably, the worlds largest exchange, Binance, is believed to currently be mulling over its plans to either stay or exit Canada as it deals with its own regulatory woes in the United States.  While it has not announced the filing of an official pre-registration undertaking, the exchange is said to be working with regulators on potentially doing so.