Coinbase secures restricted dealer license in Canada

Photo showing Coinbase in Suqian, Jiangsu province, China, June 6, 2023. (Illustrative photo by Costfoto/NurPhoto via Getty Images)

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Coinbase has obtained a Canadian registration license, the company told CNBC, allowing it to penetrate deeper overseas as it faces a regulatory crackdown in its U.S. domestic market.

The company said it is registered in Ontario as a restricted dealer with the Canadian Securities Administrators (CSA), an umbrella organization for Canada’s provincial and territorial securities regulators.

The crypto exchange said the authorization means the company now meets Canadian regulators’ strict requirements for crypto asset transactions and can operate legally in the country.

Last year, Canada introduced new guidelines for crypto exchanges that limit the amount certain investors can invest in crypto, as well as introducing mandatory registrations for crypto companies.

The policy changes led Binance, the world’s largest crypto exchange by trading volumes, to abandon operations in Canada, saying it was “no longer tenable” to operate there.

Rival crypto exchange Kraken said last year that it had filed a pre-registration undertaking (PRU) with the Ontario Securities Commission, starting the process of becoming a registered broker-dealer in Canada.

Coinbase filed its PRU in March 2023 and then officially launched in the country in August of the same year. The company says it is the first international crypto exchange to receive a restricted dealer registration in Canada.

“This is something we’ve been working on for almost three years here in Canada, and specifically with the Ontario Securities Commission over the last 12 months,” Lucas Matheson, national director of Coinbase for Canada.

“We have worked diligently with our regulators over the past year to create a Canada-compliant platform to offer to Canadians.”

Matheson said the regulatory environment in Canada has been more accommodating for crypto platforms than in the United States.

Coinbase – and the crypto industry as a whole – has faced significant backlash from the U.S. Securities and Exchange Commission in a major lawsuit over violations of securities laws.

Matheson noted that Canada launched the world’s first Bitcoin spot exchange-traded fund well before the United States – the Purpose Bitcoin ETF has been trading for three years now.

A significant market opportunity

Matheson said the market opportunity in Canada is significant.

“We have a population here that is highly educated, tech-savvy and understands the digital economy,” Matheson told CNBC.

“Our registration in Canada makes us the first and largest international cryptocurrency exchange registered in Canada. This positions us very well to help millions of Canadians access the digital economy.

Canada is home to notable tech companies, including e-commerce giant Shopify and artificial intelligence startup Cohere. Coinbase CEO Brian Armstrong visited the country in November 2023 to meet with the local team and participate in a fireside chat with Shopify CEO Tobi Lutke.

Coinbase has a technology hub located in Canada with nearly 200 full-time local employees.

As the company looks to expand further globally, Matheson said he is counting on the advantage of Coinbase’s status as an exchange that worked toward approvals from regulators before its launch.

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

The license marks the latest victory for Coinbase, which has embarked on a global charm offensive to influence regulators and push its platform deeper overseas.

In 2022, Coinbase unveiled its “Go Broad, Go Deep” strategy, which aimed to hire new management and fill local licenses in various international markets.

Last year, Coinbase chose Ireland as its primary regulatory base in the European Union, seeking to take advantage of new EU crypto rules. The company has also received individual approvals in France, Spain, Singapore, Italy, Ireland and the Netherlands.

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