Coinbase Starts Operations In Canada

Coinbase Starts Operations In Canada

Coinbase, one of the largest crypto exchanges in the world, was granted a license to start its operations in Canada. The company has registered in Ontario as a restricted dealer under the Canadian Securities Administrators (CSA). The CSA is an umbrella government organization that deals with securities regulators and covers cryptocurrencies. It's a milestone move for many reasons, including the fact that it signals a shift for the crypto industry away from the US markets that are now becoming increasingly and strictly regulated.

What Does Registration Mean For Coinbase?

The registration and authorization coming from CSA means that Coinbase meets the standards set by the Canadian government for offering its services in Canada. The agency is known for its strict restrictions and regulations on how cryptocurrencies can be traded. The registration was introduced last year when Canada created its own set of regulations about cryptocurrencies and online trading. At the time, the regulations and the legal framework were met with mixed reactions. Some lamented that the regulations are too strict in Canada, and others found them comforting, as they meant Canada was ready to accept crypto trading as a part of its mainstream financial assets.

The Canadian Market

Canada is one of the world's biggest cryptocurrency markets. It provides the exchange platform with a huge pool of users who have disposable income to invest, are tech-savvy, and know how to use Coinbase and its many complex features. Binance, one of the biggest competitors Coinbase is facing, decided to leave the Canadian market last year as a result of the aforementioned regulations. This puts Coinbase in a relatively strong position within the crypto exchange platforms market. However, it's important to note that other rival exchange platforms are looking to move to Canada as well. Kraken has been in the process of obtaining the same license since last year. That process is still ongoing, making Coinbase the only international exchange currently operational in Canada.

Coinbase Statement

Coinbase has issued an official statement, and its officials have made several interviews about the deal. "It's something we've been working on for almost three years here in Canada, and more specifically with the Ontario Securities Commission over the last 12 months," Lucas Matheson, Coinbase's country director for Canada, told the press. "We've been working diligently with our regulators over the past year on building a compliant platform in Canada to bring to Canadians." Matheson also pointed out what's on everyone's mind when it comes to cryptocurrency regulations, and that's that Canada's position on crypto regulations is much less strict than that of the US. This is one of the biggest reasons for the move.

New Opportunities

Operating in Canada opens up a lot of new opportunities for Coinbase and also for crypto exchanges that may come after it. Research done by Coinbase itself shows that Canadians hold very positive attitudes towards cryptocurrencies. About 72 percent of Canadians believe that more crypto regulations are a good thing and that the regulations posed by CSA are useful. About a third (29 percent) of Canadians are more prone to try investing in crypto now when government agencies better regulate it. Forty-nine percent of those who have already purchased crypto before said that they did so out of curiosity. At the same, 39 percent say that the biggest motivation was to diversify their portfolio. All of this goes to say that Coinbase is entering into a complex and savvy market that will be very useful for its services.

Canada as a Tech Hub For Crypto

Canada plays a huge role in the tech industry and is home to some of the largest companies in the field, most noticeably Spotify. Coinbase's CEO Brian Armstrong visited the country in November 2023 to meet with the local team and Tobi Lutke, Spotify's CEO. Coinbase's local tech hub employs about 200 people at the moment. Coinbase Ventures has also worked with local startups for years and created an ecosystem of companies it continuously collaborates with. These companies include Dapper Labs, Minerva AI, Axelar, Horizon Blockchain Games, and Zapper.

US Regulations

For a while now, US-based crypto companies have been leaving the country and moving to Europe and, recently, Canada. Coinbase is just the latest and possibly the biggest addition to this trend. The problem with the US regulations isn't that they are too strict or too complicated for crypto exchanges to fulfill. Instead, the issues arise because the regulations are too wage or outdated for the industry. The U.S. Securities and Exchange Commission (SEC) was made to work with traditional financial assets such as stocks or bonds, but it wasn't fast enough to adapt to the new realities of the crypto market. Coinbase had formally petitioned the SEC to write crypto industry rules in 2022, and the agency rejected the petition. In these efforts, Coinbase was often joined by a few other big names in the industry, including Paradigm and the Crypto Council for Innovation.

MiCA and The EU

At the same time, the regulatory landscape in the EU has gone through its biggest update. This is done via a comprehensive law that covers all the EU countries and goes into great detail about how EU users can own and trade cryptocurrencies. Markets in Crypto-Assets (MiCA) regulation covers the 27 EU countries, and it has been in effect since January 2014. Many experts have claimed that this approach to crypto regulations will be the gold standard for the industry and that it will cause many of the big companies in the industry to move to Europe. For Coinbase, Ireland has been the base of EU operations for a while.

The UAE

As a part of a broader pattern of moving the crypto market away from the US, the United Arab Emirates has always been one of the most lucrative options. It's one of the countries that has always been most open to crypto, with about 28 percent of the population owning some crypto assets. The country has three agencies that deal with regulations, and all three have come together to create a comprehensive plan. The deputy prime minister also launched the annual Dubai FinTech Summit last May, which Coinbase CEO headlined.

Wider Crypto Acceptance

The move Coinbase has made comes at an interesting time in terms of how cryptocurrencies are seen by the general public and by traditional financial institutions. Both are much more welcoming to crypto than they have been just a few years ago. Banks, stock exchanges, and even conservative institutions such as pension funds are looking into crypto and its possibilities. Even luxury brands are starting to accept payments made in crypto. With the increased interest, there are more regulations, and some may find them to be restrictive. It's especially the case with those who got into crypto early when there were almost no rules to speak of.

Conclusion

Coinbase, one of the biggest and most trusted crypto exchanges in the world, was licensed to operate in Canada. It's a new market for Coinbase and one that's full of potential, as Canadians are affluent and open to cryptocurrencies. The move is part of a broader trend, and there are other crypto exchanges moving from the US to Canada and Europe, as the two have a better and more comprehensive set of regulations. Coinbase already has a hub installed in Canada and cooperates with local tech companies.