Binance Announced Ontario, Canada is Now a ‘Restricted Jurisdiction' Following Province's Crypto Crackdowns

The world’s biggest crypto exchange has come under heavy scrutiny by regulators worldwide. Recent moves by the Ontario Securities Commission have caused Binance to vacate the jurisdiction of the province.

By
Chung Yee
on
June 28, 2021
Category:
BSC News

Restricted Jurisdiction 

Binance, the giant crypto exchange, has announced that it has added Ontario to its list of ‘restricted jurisdictions.’ The announcement came on June 25th, four days after the Ontario Securities Commission (OCS) issued a Statement of Allegations against Bybit Fintech Limited for violating provincial regulations. Binance’s apologized for any inconvenience to Ontario users, but the regional government has taken a uniquely harsh stance towards crypto.  All active users will be given until the end of the year to close their positions. 

The allegations to Bybit Fintech Limited were a clear sign to Binance to decide on the practicality of operating in Ontario as the warning signs were coming. On March 29, 2021, the Ontario Securities Commission announced a regulatory framework to ensure investors’ protection and market integrity. The provincial regulators did not ban crypto-asset trading platforms outright but are looking to ensure that such platforms conform to the prescribed regulations.  The recent statement toward Bybit Fintech directly regarded registration and prospectus requirements as well as non-compliance with securities and derivatives regulations.  

Source: Binance’s Terms of Use has included Ontario (Canada) as part of the list of ‘Restricted Jurisdiction.’

In the notice to its users, Binance assured that the decision to cease onboarding users from Ontario would take effect to comply with regulations immediately. Existing Ontario-based customers must close their position and have been given until December 31 to do so. 

Tightening the Regulatory Noose

The Ontario Securities Commission is not the only regulatory body turning up the heat on Binance. On June 25, 2021, the Japanese watchdog warned Binance for operating within Japan without permission. A similar warning was also given to the Bybit derivative exchange in early June of this year. 

Questions have started to surface as to why there has been a sudden regulatory squeeze on these exchanges. One of the major concerns by regulators such as the Securities and Exchange Commission is to protect the investors. Derivative exchanges that offer leverage trading are increasingly becoming a cause for concern. But crypto users are apt to question the moves of regulators when one platform has been operating within the same jurisdiction restriction without scrutiny. 

Source

Many unwary investors are stepping into the crypto world lured by the promise of massive returns within a short period. The incredible gains are possible through strategies like leverage trading. Leverage trading has recently been blamed for the market dip as ‘unsophisticated’ investors started to take huge risks as the market started to peak. Market volatility is high for a new asset class, and this massive price swing is further amplified through leveraged trading. 


Charting the Way Forward

It is undeniable that as crypto-assets become widely accepted that onboarding platforms will continue to grow. The role of a proper regulatory framework then becomes essential. In the case of Binance, there could be efforts taken to ensure regulatory compliance, but all contravening acts must cease immediately. For the world’s largest crypto exchange, the decision to cease the onboarding of customers from Ontario is a measured move not further to aggravate their relationship in Canada. 

While it would be impractical and unreasonable for Binance to force its existing Ontario-based customers to close all positions and possibly run into massive losses, they were given an adequate time frame to exit. Not all those invested will have the required knowledge to manage the risks in crypto, and the role of regulation can help mitigate those risks. However, those seeking a way can usually overstep restrictions using VPNs and other strategies to hide their location.

Source: Steps taken by Binance to meet its regulatory obligations 

Binance has been openly declaring its efforts to tow the regulatory lines. Steps were taken to ensure that the proper individuals are tasked with this role. To this end, Brian Brooks, a former head at the Office of the Comptroller of Currency (OCC) chair, was hired to lead Binance.US. On March 25, 2021, two former Financial Action Task Force (FATF) Executives, Rick McDonell Josée Nadeau, were appointed for compliance and regulatory strategies. 

Regulation and Compliance is Part of the Ecosystem

The market is starting to mature, and as more investors are becoming aware of crypto assets, the responsibility of crypto exchanges such as Binance becomes more pronounced. Regulation is a necessary component in all jurisdictions. The best way forward is to ensure that these regulations are reasonable and progressive for continued adoption. With less flak from regulators, more focus and resources should bring a more robust and inclusive ecosystem.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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