Key takeaways:
- In the midst of a domestic regulatory crackdown, Coinbase has doubled down on its global expansion by obtaining restricted dealer licenses in Canada.
- With the issuance of this new permit, Coinbase was formally recognized as a legitimate cryptocurrency business in Canada.
In the midst of a domestic regulatory crackdown, US-based cryptocurrency exchange Coinbase has doubled down on its global expansion by obtaining restricted dealer licenses in Canada.
On April 3, Coinbase officially announced that it has secured a new license in Canada. It is now registered as a restricted dealer under Ontario’s Canadian Securities Administrators (CSA).
With the issuance of this new permit, Coinbase was formally recognized as a legitimate cryptocurrency business in Canada. According to the announcement:
“The registration is the culmination of months of hard work, starting in March 2023 when we signed an Enhanced Pre-Registration Undertaking that signified our dedication to regulatory compliance and operational excellence,”
According to CSA’s national registration data, two Coinbase-related organizations are registered in Canada, including Coinbase Incorporated, which is listed as a restricted dealer. Coinbase Canada, the other, is listed as an international dealer.
According to CSA, restricted dealer registration is a unique type of dealing registration used for businesses that don’t exactly fit into any other category. Regulators set specific standards for these businesses.
Legal intelligence source JD Supra states that foreign dealers are prohibited from trading with Canadian clients in equity or debt securities of Canadian issuers other than government issuers.
The cryptocurrency exchange Coinbase made several significant moves in Canada before obtaining its new license. In August 2023, the exchange made its formal debut in Canada. Later, it extended its services to Canadian citizens by forming a joint venture with the regional financial services company, Peoples Trust Company.
The company recently announced that as of April 2024, Coinbase will employ about 200 locals full-time, operating out of a tech cluster in Canada.
Competing exchanges, including Kraken, have begun registering as registered dealers in Canada. In an effort to get restricted dealer status, Kraken submitted a pre-registration commitment to the Ontario Securities Commission in Canada in March 2023.
The action was taken to assist Kraken in adhering to the new regulations that the CSA released in February 2023 for platforms that trade digital assets.
The new regulations state that local cryptocurrency trading platforms must adhere to stronger custody guidelines, limitations on leverage, and a prohibition on trading stablecoins without the CSA’s prior written approval.
