Binance withdraws from Canada following additional crypto regulations
Binance is a popular cryptocurrency exchange with high transaction volumes across various cryptocurrencies, including bitcoin (BTC), ethereum, PEPE, and FLOKI. With its broad portfolio and diverse product offerings, Binance has expanded its services globally. However, some countries do not support the exchange’s role in the crypto industry.
Recently, some countries have taken a stricter stance on the usage of cryptocurrencies. While a few nations have prohibited digital currencies, others, like El Salvador, have recognized bitcoin as legal tender.
Users, investors, and developers wish for cryptocurrency acceptance because this financial system offers a more extensive offer of services and less governmental control. Still, official bodies are worried about crypto trading and investing due to volatility concerns.
What’s the reason behind Canada’s regulatory changes?
The Canadian Securities Administrators (CSA) announced this February that new guidance would be released on prohibiting crypto assets trading platforms. In other words, people couldn’t buy or deposit stablecoins without prior approval from the CSA, and obtaining them would be challenging.
Considering that the co-founder of Binance, Changpeng Zhao, is a Canadian citizen, the news wasn’t that pleasant. However, the company tweeted its wish to continue collaborating with Canadian regulators to work on a framework for cryptocurrencies.
Despite disagreeing with them, Binance has announced that it will offer support to its Canadian users in light of recent legal changes. The exchange is currently exploring options to continue operating within the Canadian financial sector, but due to the law, it cannot offer extensive support.
What’s the official view on cryptocurrencies in Canada?
Generally speaking, cryptocurrencies are legal in Canada, meaning people can use them, and businesses can choose to accept crypto as a payment option. Buying crypto is permitted, but when it comes to taxation, users must report losses and gains from buying, selling, or mining digital currencies. However, users can’t pay their taxes with crypto.
The Bank of Canada is the only institution the Canadian government recognizes for issuing currencies. However, cryptocurrencies are not regulated by financial institutions. Despite the lack of support, people continue to use crypto, and some companies accept it as payment. Unfortunately, this disadvantages users because their wallets and assets are not as secure.
Despite the lack of support, the government of Canada offers guidance on its official webpage, where people are advised on buying services or goods from retailers that accept crypto or selling coins on digital exchanges.
Why don’t governments trust cryptocurrencies?
Financial institutions are hesitant to fully embrace blockchain technology and crypto investments as legal tender due to the decentralized nature of cryptocurrencies and the centralized nature of financial institutions. A specialized system is necessary to successfully combine these two concepts while maintaining their unique features.
Cryptocurrencies are known to be highly volatile, which leads to uncertainties regarding investment safety. However, many other reasons lead to the government’s decisions, such as the following:
- Less control on criminal or fraudulent activities and the inability to track the movement of coins in the economy;
- Concerning organizations using cryptocurrency to trade harmful chemicals and substances;
- Fiscality is difficult to assess, and governments can’t plan the monetary policies and tax regulations that easily on volatile assets;
The concept of cryptocurrency is still young and can’t provide the same reliability the current financial system does, despite its limitations. In case of default and considerable changes, the government can still ensure some support, which is not the case with cryptocurrencies.
Will cryptocurrencies ever be regulated?
With many people interested in the crypto sector and investing for years, worldwide adoption is widely discussed. Of course, it would take time for all countries to provide the proper economic ecosystem for Bitcoin or Ethereum to work in real-world situations. Still, experts are positive about Bitcoin’s acceptance since it’s one of the most reliable coins out there, and it’s also the first cryptocurrency ever.
However, nations should take their time and explore options because we’ve already seen what a sudden decision can do to a country, in the case of El Salvador. The president made bitcoin legal tender and invested considerable resources to encourage people to use bitcoin.
Recent reports indicate the country lost over $60 million in just a year due to the bitcoin experiment. Very few businesses accept bitcoin as payment, and its value has decreased in El Salvador. Moreover, only a tiny percentage of citizens have access to a mobile phone with an internet connection, which is necessary for using bitcoin. Therefore, the usage of bitcoin is relatively low in the country.
There’s also the case of the Central African Republic that made Bitcoin a legal tender in 2022. However, in 2023, the government canceled the project. The reasons include challenging economic conditions, political instability, and resource shortages. Only 10% of the population has access to the internet, and 85% of citizens need electricity in their homes.
For a cryptocurrency to become legal tender and be supported by the economy, it would have to settle down and not have dramatic increases and decreases in price, which is less likely to happen soon in the case of Bitcoin.
Secondly, sustainability concerns contribute to government reticence since mining cryptocurrencies requires enormous energy, increasing energy prices. Considering that official bodies are trying to adopt practices that don’t harm the environment and protect the citizens, it’s less likely that crypto will become the norm soon. Therefore, crypto mass adoption won’t happen too soon; not every country is financially prepared.
The Canadian government announced changes in crypto regulations, leading Binance, the biggest cryptocurrency exchange, to cease its activities there. Besides the volatility concern, cryptocurrency-based products and services are less likely to be adopted worldwide due to sustainability issues.
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