What does Binance leaving crypto mean for the crypto industry?

Key Takeaways

• Binance has become the latest crypto company to depart Canada amid regulatory concerns
• Canada is a small market but US regulators have also clamped down severely 
• The move by Binance amplifies the growing concern within the industry that crypto will have no choice but to move offshore

Another week, another story of regulatory woes for the cryptocurrency industry. The world’s biggest crypto exchange by volume, Binance, announced Friday that it was fleeing Canada off the back of regulatory changes in the nation. 

“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.”, the company said in a statement on Twitter. 

Unfortunately, today we are announcing that Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace.

We would like to thank those regulators who worked with us collaboratively to address the needs of Canadian users.…

— Binance (@binance) May 12, 2023

As the tweet also notes, Canada held “sentimental value for us as the home country of our founder (CEO Changpeng Zhao)”. 

Binance may be the biggest, but it is not the first crypto firm to abandon the Canadian market. In February, the Canadian Securities Administrators (CSA) published new expectations around the registration of crypto platforms in the country, specifically around the requirement to file preregistration undertakings. 

This has proved a problem. Fellow exchange OKX withdrew from the Canadian market within a month. The decentralised exchange dYdX soon followed, and last month Paxos, who formerly issued the Binance-branded stablecoin BUSD, did the same. Now, it is Binance’s turn. 

US regulators will be watching

Pulling out of the Canadian market should not be a big issue in itself. As Binance says in its tweet, the nation represents a “small market”. The population of Canada is approximately 38 million, slightly less than the US state of California. 

Nonetheless, the developments are concerning as they come amid a broader regulatory clampdown in the US. South of the border in the US, the crypto industry is at war with regulators, and Canada’s unaccommodating stance won’t help things.

Binance itself is already under pressure via multiple investigations…