Canada Continues Crypto-Friendly Wave as Binance Registers as MSB

Canada’s anti-money laundering and anti-terrorism financing regulator has registered Binance, the largest centralized cryptocurrency exchange in terms of trading volume, granting it a license for various financial activities. The move further highlights Canada’s friendly stance towards the emerging crypto market. 

Binance Obtains License to Offer Financial Services in Canada

Binance has registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), gaining a license for foreign exchange dealing, money transferring, and dealing in virtual currencies. The license was granted to “BINANCE CANADA CAPITAL MARKETS,” a new subsidiary of the exchange that will function as a Money Service Business (MSB).

In June, Binance was inundated with a series of regulatory issues as various jurisdictions accused the exchange of operating without proper licensing. It started when the Japanese Financial Services Agency (FSA), in late June, warned Binance that it did not properly register and thus was unauthorized to operate within the country.

Following this, regulatory bodies from the UK, Thailand, Italy, Germany, China, Malaysia, and the US voiced concern about the exchange’s unregulated operations, with some asking for a halt of services. The exchange even entered a spat with the Ontario Securities Commission, which resulted in Binance ceasing services in the relevant jurisdiction.

At the time, Binance said:

“As part of our continuing compliance efforts, Binance has updated its Terms of Use to provide that Ontario (Canada) has become a restricted jurisdiction, effective 2021-06-26 at 3:59:59 AM (UTC). Regrettably, Binance can no longer continue to service Ontario-based users.”

To counter all the regulatory scrutiny, Binance said it would adopt regulations. To achieve this, the exchange stated it would double the size of its compliance team by the end of 2021. Binance CEO Changpeng Zhao also claimed that the company would become fully compliant, and started with decreasing the daily withdrawal limit for unverified users.

Notably, Binance has also obtained in-principle approval from the Central Bank of Bahrain (CBB), allowing the exchange to provide crypto-related services in the Kingdom of Bahrain. The announcement detailed:

“The in-principle approval from CBB still requires Binance to complete the full application process, which is expected to be completed in due course.”

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Canada Preserves a Friendly Approach to Crypto

While Bahrain and Canada are both among the first group of countries to register Binance as a financial services provider, the latter has been pushing into crypto for quite some time now. Earlier this year, the Canadian stock exchange became the first to host a spot Bitcoin ETF.

Called Purpose, the Bitcoin ETF started trading under the ticker BTCC.B and BTCC.U, with a management fee of 1.00% per annum. As expected, the fund had a splashy debut, trading over $80 million in volume within the first hour of its launch.

Canadian officials also hold a friendly stance towards the crypto market. Regulators in the US, including the former president, have been scrutinizing the industry, calling it a threat to the country’s financial system. On the contrary, some Canadian officials have taken friendlier stances. 

In late November, Paul Beaudry, Deputy Governor at Bank of Canada, said he believes digital assets are not developed in a way to create a systemic risk for the financial system. He said,

“We’re not at the point yet of thinking this a big risk for the economy but this is something we’re keeping an eye on very closely.”

This crypto-friendly stance has also paid off well. For instance, instead of waiting for the US SEC, Fidelity Investments launched a spot Bitcoin ETF in Canada. Of course, there were already several other Bitcoin ETFs. And due to this competition, the fund chose a management fee of only 40 basis points. 

In comparison, BITO, the Bitcoin futures ETF by ProShares, carries an annual management fee of 95 basis points. While this is a relatively high fee for an ETF, a lack of competition, as well as the SEC’s skepticism toward spot Bitcoin ETFs, pushed US investors toward the fund. For context, BITO reached a valuation of over $1 billion on its first trading day.

Do you think other countries will follow suit and grant regulatory approval to Binance? Let us know in the comments below.