The Canadian Securities Regulatory Authority (CSA) has extended the regulatory compliance period for cryptocurrency exchanges until the end of 2024. While exchanges that fail to comply could face various sanctions at the end of the year, licensed exchanges continue to operate across the country.

The CSA’s decision comes amid growing concerns about risks associated with stablecoins pegged to fiat currencies. The regulator has stated that investor protection is a top priority. The extension, initially expected to expire in October, gives exchanges more time to comply with regulatory requirements or offer safer alternatives. The pegging of stablecoins to traditional currencies at a 1:1 ratio has become a major problem, especially since past crashes like TerraUSD have led to stablecoins being pegged 1:1 to traditional currencies.

In this context, cryptocurrency exchanges risk facing serious sanctions if they do not comply with the new regulations by the end of the year. These sanctions include the prohibition of offering certain products to Canadian users. This has led to the withdrawal of major exchanges, especially those operating on a global scale, such as Binance, KuCoin and Poloniex, from the Canadian market.

Binance announced its withdrawal from Canada in May 2023. The company said it made the decision due to the difficulty of dealing with trading limits and restrictions on stablecoins like USDT. KuCoin and Poloniex were banned in Canada in 2022 as a result of sanctions imposed by the Ontario Securities Commission (OSC); both exchanges failed to comply with Canadian securities laws.

Licensed Exchanges Continue Their Operations

Despite regulatory challenges, licensed cryptocurrency exchanges continue to operate in Canada. Exchanges such as Kraken, Coinbase, and Bitget maintain their presence in the Canadian market by adhering to strict regulations. The increasing pressures on Canada’s cryptocurrency ecosystem and the strict regulations it imposes are aimed at both protecting investors and increasing the reliability of exchanges. Regulatory pressures on stablecoins could significantly reshape the use of these products.