Coinbase Obtains Restricted Dealer License in Canada, Expanding Abroad Amid SEC Scrutiny

Coinbase has announced that it has obtained a registration license in Canada, a move that will enable the company to expand its operations internationally amidst increasing regulatory scrutiny in its home market of the United States. The company revealed that it has been granted registration in Ontario as a restricted dealer under the Canadian Securities Administrators (CSA), which serves as the collective body for securities regulators across Canada's provinces and territories.

Coinbase has highlighted that obtaining this authorization signifies that the company now meets the stringent requirements set by Canadian regulators for conducting dealings involving crypto assets, thereby allowing it to operate legally within the country's borders.Canada implemented new guidelines for crypto exchanges last year, which included limitations on the amount certain investors could invest in cryptocurrencies and the introduction of mandatory registrations for crypto firms. These policy changes prompted Binance, the world's largest crypto exchange by trading volumes, to cease its operations in Canada, citing that it was no longer feasible to continue operating there.

In response to the regulatory changes, rival crypto exchange Kraken announced 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 filing its PRU in March 2023 and officially launched its operations in Canada in August of the same year. The company asserts that it is the first international crypto exchange to receive restricted dealer registration in Canada, positioning itself as a pioneer in the Canadian crypto market.

Lucas Matheson, Coinbase's country director for Canada, emphasized the extensive efforts the company has invested in obtaining regulatory approval in Canada, spanning nearly three years with focused attention on collaboration with the Ontario Securities Commission (OSC) over the past 12 months.He underscored Coinbase's commitment to building a compliant platform tailored to meet the regulatory standards in Canada, reflecting the company's dedication to providing a secure and transparent environment for Canadian users.

Matheson also highlighted the relative accommodation of the regulatory environment in Canada for crypto platforms compared to the United States, suggesting that the Canadian regulatory landscape may offer more flexibility and clarity for crypto businesses to operate within. This acknowledgment speaks to the importance of regulatory cooperation and adherence to compliance standards in facilitating the growth and adoption of crypto services in different jurisdictions.

Matheson highlighted the contrasting regulatory approaches between Canada and the United States, citing Canada's pioneering launch of the first spot bitcoin exchange-traded fund (ETF) globally, notably the Purpose Bitcoin ETF, which has been trading for the past three years.

This observation underscores the more progressive stance of Canadian regulators towards embracing innovative financial products like cryptocurrency ETFs compared to their counterparts in the United States. The mention of the Purpose Bitcoin ETF serves as an example of Canada's proactive approach in providing investors with regulated access to crypto assets through traditional investment vehicles, potentially influencing the broader crypto industry's perception of regulatory environments across different jurisdictions.

Matheson emphasized the Canadian population's high level of education, tech-savviness, and understanding of the digital economy as key factors driving Coinbase's decision to register in the country. With this registration, Coinbase becomes the first international and largest cryptocurrency exchange to be officially recognized in Canada, positioning it to serve millions of Canadians seeking access to the digital economy.

Canada's robust tech ecosystem, characterized by notable companies like Shopify and Cohere, underscores the country's potential as a strategic market for Coinbase's expansion efforts. In November 2023, Coinbase's CEO Brian Armstrong visited Canada to engage with the local team and participate in discussions with industry leaders, including a fireside chat with Shopify CEO Tobi Lutke.With a tech hub boasting nearly 200 full-time local employees, Coinbase is well-positioned to leverage Canada's talent pool and innovative environment.

As Coinbase looks to further its global expansion, Matheson highlighted the advantage of Coinbase's proactive approach to obtaining regulatory approvals, which sets it apart as a trusted exchange in the cryptocurrency space.Matheson highlighted Coinbase's strong brand presence in Canada as a publicly traded company committed to compliance and registration worldwide. He emphasized Coinbase's reputation for building trust with its customers and fulfilling its mission within the cryptocurrency space.

The registration license in Canada is the latest achievement for Coinbase, reflecting its ongoing efforts to expand globally and engage with regulators. In 2022, Coinbase unveiled its "Go Broad, Go Deep" strategy, which involved hiring new leaders and obtaining local licenses in various international markets.Last year, Coinbase selected Ireland as its primary regulatory base within the European Union, aiming to leverage new crypto rules in the EU. The company has also obtained individual approvals in France, Spain, Singapore, Italy, Ireland, and the Netherlands.