The world’s largest crypto exchange, Binance, said last week that it would stop servicing Canadian customers due to “new guidance related to stablecoins and investor limits provided to crypto exchanges.” But while the exchange said it will return to the country “someday,” its exit leaves behind a huge gap that its competitors are aiming to fill.
Coinbase is one of the big players in the space planning to do just that.
Coinbase, close behind Binance as the world’s No. 2 crypto exchange, is “open for business,” Nana Murugesan, VP international and business development at the exchange, told TechCrunch+. “We’ve always focused on playing the long game.”
Overall, the Canadian market for crypto is large, but it’s far from the largest. Crypto revenue in the country is expected to reach $1.42 billion in 2023, per Statista. Currently, about 13% of Canadians own or use crypto, down slightly from the year prior and up 116% from 2021, also per Statista.
In late February, the Canadian Securities Administrators (CSA) started requiring crypto exchanges to sign new, legally binding undertakings if they were pending registration with the agency. CSA took action after a number of crypto trading platforms went insolvent, including Voyager Digital, FTX and BlockFi.
As it stands, all crypto exchanges must register with Canadian regulators before taking on users in the country. If they don’t, they’ll face millions of dollars in penalties, like crypto exchanges ByBit and KuCion did in June 2022 for operating as “non-compliant” platforms.
Binance isn’t the only major exchange withdrawing from the Canadian market. OKX also told users in March that it would cease operations in Canada, citing the new regulations.
Some of the exchanges that stopped operating in the country have said they’ll return some day, but in the meanwhile, Coinbase, Kraken, Gemini and Crypto.com have completed pre-registration undertakings (PRUs) with the Ontario Securities Commission to operate in the country.
“Our platform is operational, which means that people [in Canada] can transfer digital assets from any platform to our exchange,” Lucas Matheson, country director for Canada at Coinbase, said. “We’re already seeing a flight to quality over the last few weeks.”
In that time frame, Coinbase has recorded inflows to its platform nearly tripling over the average of the rest of the year, according to Matheson.
The exchange is rolling out features “as it fits into the regulatory framework,” Murugesan said. “That has always been our approach that’s actually working very well for us. It may not be working for all companies, but it actually fits the way we do things.”
It’s clear that some exchanges in the space find Canada’s regulatory approach limiting, but Matheson and Murugesan see it as a positive for the most part.
“We don’t see eye to eye on everything right now with regulators, but we have a very strong relationship and willingness for them to engage with the industry,” Matheson said.
“They’re talking to the industry and asking for our opinion,” he added. “It’s an entirely different style of regulation that’s really supportive.”
Coinbase plans to continue focusing on the market and growing its product roadmap. The exchange has new customer relationship management (CRM) campaigns in the works for Canada and plans to launch new payment rails and more fiat-to-crypto experiences in the coming months, Matheson and Murugesan said.
While Coinbase wouldn’t disclose how much of its market share Canada accounts for, Murugesan noted the company has been investing in the country for a “long time” and has over 200 engineers based there.
“We’re not rushing it, but our ambition is definitely large in Canada,” Murugesan said.