All crypto exchanges are required to sign such undertaking if they want to operate in Canada following a February rule change.
On April 12, cryptocurrency exchange Gemini announced it filed a pre-registration undertaking with the Ontario Securities Commission (OSC), which oversees capital markets in Canada’s most populous province. The undertaking is a prerequisite to becoming a restricted dealer in Canada and is necessary for all cryptocurrency exchanges wishing to conduct business in the country. Cynthia Del Pozo Garcia, Gemini’s director of strategy and corporate development, wrote:
“As one of the most important and developed markets in the Americas, Canada has played an essential role in Gemini’s international expansion.”
According to Del Pozo Garcia, Gemini holds holds “many licenses globally,” such as state money transmitter licenses, an E-Money License from the Financial Conduct Authority in the United Kingdom, and an E-Money License from the Central Bank of Ireland. “Related to our licenses, Gemini must undergo annual audits of our financial statements and is subject to bank examinations conducted by the New York Department of Financial Services,” the director said.
On Feb. 22, the Canadian Securities Administrators (CSA) published a notice requiring all crypto asset trading platforms to sign a legally binding pre-registration undertaking to continue operating in the country. Among many restrictions, exchanges will be prohibited from allowing Canadian clients to buy or deposit stablecoins without prior approval from the CSA.
“In light of recent insolvencies involving a number of CTPs, including Voyager Digital, Celsius Network, the FTX group of companies, BlockFi and Genesis Global (collectively recent CTP insolvency events), we are introducing important new investor protection provisions into the standard form of PRU.”
Since the new regulations took effect, cryptocurrency exchange OKX has announced it would cease operations in Canada by June 2023. Meanwhile, fintech company Paxos said it would withdraw from Canada, citing regulatory uncertainty. Binance and Kraken have since stated that they filed the pre-registration undertaking required to continue operations in the country.