Coinbase Obtains Restricted Dealer License in Canada, Expanding Overseas Amid SEC Regulatory Pressure

Coinbase shared with CNBC that it has secured a registration license in Canada, enabling it to expand its operations internationally amidst increasing regulatory scrutiny in its native U.S. market.

The company disclosed that it has obtained registration in Ontario as a restricted dealer under the Canadian Securities Administrators (CSA), which serves as the overarching body for securities regulators across Canada’s provinces and territories.

This milestone indicates that Coinbase now complies with the stringent requirements set by Canadian regulators for dealing with crypto assets, allowing it to conduct its operations lawfully within the country.

Canada implemented new guidelines for cryptocurrency exchanges last year, imposing limits on the amount certain investors can invest in crypto and mandating registrations for crypto firms.

These regulatory shifts prompted Binance, the world’s largest crypto exchange in terms of trading volumes, to cease its operations in Canada, citing the untenable nature of continuing its business there.

Coinbase’s “Go Broad, Go Deep” strategy accelerates international presence, with Ireland as the primary EU regulatory base and global approvals.

In a parallel move, competitor Kraken announced last year that it had initiated the process to become a registered dealer in Canada by filing a pre-registration undertaking (PRU) with the Ontario Securities Commission.

Coinbase followed suit by submitting its PRU in March 2023 and subsequently launched its operations in the country officially in August of the same year. The company asserts that it holds the distinction of being the first international crypto exchange to secure restricted dealer registration in Canada.

“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,” stated Lucas Matheson, Coinbase’s country director for Canada, in an interview with CNBC.

“We’ve been working diligently with our regulators over the past year on building a compliant platform in Canada to bring to Canadians.”

Matheson highlighted that the regulatory position in Canada has been more accommodating for crypto platforms compared to the U.S.

Coinbase, along with the wider crypto industry, has encountered significant pushback from the U.S. Securities and Exchange Commission through a major lawsuit concerning violations of securities laws.

Matheson pointed out that Canada introduced the first spot bitcoin exchange-traded fund globally long before the U.S. did — the Purpose Bitcoin ETF has been trading for the past three years.

“Sizable market opportunity,” Matheson said, emphasizing the significant potential in Canada.

“We have a population here that’s highly educated, that’s technology-savvy, that understands the digital economy,” Matheson told CNBC.

“Our registration in Canada makes us the first international and largest cryptocurrency exchange that’s registered in Canada. That positions us really well to help millions of Canadians access the digital economy.”

Canada boasts notable tech firms such as e-commerce behemoth Shopify and AI startup Cohere. In November 2023, Coinbase’s CEO Brian Armstrong visited the country to engage with the local team and engage in a fireside chat with Shopify CEO Tobi Lutke.

Lucas Matheson underscores Canada’s favorable regulatory environment and Coinbase’s commitment to compliance.

Coinbase maintains a tech hub in Canada with nearly 200 full-time local employees.

Looking ahead to global expansion, Matheson highlighted the advantage of Coinbase’s status as an exchange that secured regulatory approvals before launching.

“We have a strong brand here in Canada as a publicly traded company, as a company who is committed to compliance, and registration more broadly in the world,” he said. “I think Coinbase has built a strong customer base of clients who trust our platform and the mission of Coinbase.”

The license marks the latest win for Coinbase, which has been engaged in a global charm offensive to sway regulators and expand its platform overseas.

In 2022, Coinbase disclosed its “Go Broad, Go Deep” strategy, which aimed to recruit new leaders and apply for local licenses in various international markets.

Last year, Coinbase chose Ireland as its primary regulatory base in the European Union, capitalizing on new crypto regulations in the EU. The company has also obtained individual approvals in France, Spain, Singapore, Italy, Ireland, and the Netherlands.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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