Ontario Is Trying To Regulate The Crypto Market To death

Written By Neil McKenzie-Sutter, Posted on March 30, 2022

While the underlying situation is somewhat complex, it’s unarguable the recent announcement by cryptocurrency mega exchange, Binance would stop serving Ontarian customers in the near future falls into a pattern of unhelpful behavior toward several cryptocurrency exchanges by the Ontario Securities Commission (OSC).

The nuance here is this spat between the OSC and Binance goes back to mid-2021 and has gone back and forth a few times. In these earlier rounds, Binance admitted they had been operating in Ontario illegally until then and promised to shutter operations in Ontario. 

Since this is all coming to a head in spring 2022 you might be unsurprised Binance took no action, didn’t cease operations in Ontario and so they’re in even more trouble with the OSC now than they were before (read more about that here)

There are a lot of confusing details in the Binance – OSC spat, however before proceeding it’s important to note that Binance acknowledges it broke some laws on the books. As a general principle, it’s not acceptable to have mega corporations set up shop in a jurisdiction and just steamroll local rules/customs.

There’s an obvious pattern of behavior happening here, and it’s that the OSC and the Canadian government are creating an environment that will stifle innovation and adoption of the crypto space, especially in Canada’s largest province – Ontario.

And it must be recognized the OSC is stifling economic growth in Ontario. In the thrall of the recent Freedom Convoy Protests, the OSC embarrassingly reported the CEOs of two more, massively influential cryptocurrency exchanges, to the police. These CEOs were Jesse Powell of Kraken and Brain Armstrong of Coinbase. 

What was the reason the OSC reported these CEOs to the police? It was over tweets the two put out, letting their users know about withdrawing crypto to decentralized wallets if they were concerned about Canadian government actors seizing Canadian users’ crypto if they were if they had supported the Freedom Convoy Protests, which was the line the Canadian government taking a few months back. 

Since this alarming interaction, Coinbase has apparently somewhat caved and sent out an announcement on Mar. 25th, 2022, that as of April. 4th the company would require increased surveillance of transactions exceeding $1000.00

For now, Coinbase is apparently going to play ball with Canadian regulators, but what if in the future the regulatory environment becomes so hostile that even Coinbase eventually decides to exit the Canadian market? Well, one thing you can be 100% confident about is that if these crypto giants were kicked out of Canada/Ontario, little impact would be felt by these companies. It is only Canadian consumers who are being made to suffer due to the actions of the OSC, and the Ontario and Canadian governments. 

Coinbase is the largest cryptocurrency exchange in the U.S. It is also the simplest platform to use. In the view of most experienced cryptocurrency users and investors, Coinbase is the ‘Mickey Mouse’ of the trading platforms but it is a great tool for news users wanting to learn about the technology. So, to reiterate, the idea of the OSC reporting Coinbase CEO Brian Armstrong (like him or hate him as some do), is totally ludicrous and honestly psychotic. 

Kraken cryptocurrency exchange has been around since 2011, so they know the industry quite well. The tweets that got Kraken CEO Powell reported to authorities by the OSC were ostensibly neutral: Powell and Armstrong were just informing their exchanges’ users that they would comply with orders by authorities to freeze/seize crypto assets. Definitionally, complying with orders from authorities shouldn’t get you reported to authorities. Kraken operates in all countries in the world except North Korea, Iran, Cuba, and Japan.

Let’s finally circle back to Binance, which admittedly plays a bit fast and loose with regulators in a few different jurisdictions, however, Binance is the largest cryptocurrency exchange in the world for a reason. 

If you’re looking for the next tech giant like Apple, Amazon, Microsoft; Binance is an easy contender to move into a position like this within a few years. The Binance utility token (BNB), the only use case for which is trading within the platform itself, was only just fell into the fourth-largest cryptocurrency by market cap, after Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). 

The BNB utility token itself is recognized as one of the finest cryptocurrency asset investments so far in the space, so considering all that, you would think the OSC, and the Ontario and Canadian governments would actually want to attract businesses that have proven profitable in the space.

Other countries are doing exactly that. At virtually the exact same moment as Binance’s announcement they would be leaving the Ontario marketplace, it was announced that the UAE had offered Binance a virtual asset license (the first of its kind offered in the UAE) to operate fully legally in that country.  

The reason the UAE is doing this is that the nation wants to cultivate a reputation and a good working rapport with businesses in the cryptocurrency sphere because that industry is in its infancy and shows incredible promise for the future.

Additionally, since the UAE announcement, Binance CEO Changpeng Zhao has been on a whirlwind tour through Latin America. The reason for this tour hasn’t been outwardly stated, however, we can make educated guesses.

Zhao has met with numerous leaders on his trip, most notably the President of El Salvador who has made his country the first to recognize Bitcoin as legal tender, Zhao was spotted with Mexico’s third richest man who also happened to be visiting El Salvador. Zhao was also recently given the key to the city of Rio de Janeiro by Mayor Eduardo Paes, who has recently made positive moves toward greater acceptance of cryptocurrency.

The leaders of numerous countries and financial regulators have clearly gotten the message, and will soon be reaping the benefits of cultivating the burgeoning cryptocurrency sphere. 

The inverse is true of the OSC, which is arbitrarily limiting the competitiveness of Ontario and Canada in this space. Limiting cryptocurrency transaction applications in Ontario may serve the government’s short-sighted goals to control Ontarians’ finances, but it will lock Ontario and much of Canada out of the growing crypto economy.

Neil McKenzie-Sutter

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