Paxos, a New York-based financial technology company and issuer of Binance USD (BUSD) stablecoin, plans to end its operations in Canada on June 2. Though the announcement published on its website does not address regulatory hurdles as a reason to exit, the platform joins the list of OKX and dYdX which recently announced to wind down services in Canada citing stricter crypto regulations.
The platform urges clients to withdraw their funds at their “earlier convenience” as user accounts on the Paxos will be disabled on June 2. Paxos will restrict Canadian users from initiating any trade following the due date, but users maintaining balances on the platform will be allowed to access and withdraw funds after the deadline with longer wait times.
The platform revealed that accounts with zero balances would be automatically closed on May 9, but said that users’ funds are safe and claimed to reflect the balances on the accounts in line with the implied “terms and conditions.”
Paxos advised users who do not have access to accounts on other exchanges to carry out their transactions directly with the banks associated with itBit, a payment platform at Paxos which enables the external transfer of funds.
Paxos noted in a statement:
Paxos will continue to assess its readiness to re-enter the Canadian market in cooperation with the OSC at a future date.
Stricter Regulations Pushed Paxos To Exit
Stricter crypto regulation in Canada comes on the heels of the FTX saga, which saw billions of dollars wiped out from the industry. It pushed financial watchdogs worldwide to restructure their crypto regulations in order to protect investors. Similarly, Canada is one of the jurisdictions that decided to imply tougher regulations.
Canadian Securities Administrators (CSA) issued a notice on February 22 wanting all crypto platforms to sign new legally binding agreements in order to operate in the country.
The new undertakings require crypto firms to get written authorization from the CSA before purchasing any Value Refferencec Crypto Assets or depositing them. It specifically mentions cryptocurrency stablecoins whose value is pegged to the dollar.
While some crypto platforms such as Paxos, OKX, and dYdX opted to leave the country, crypto exchanges Gemini and Coinbase will remain active in Canada.
As US regulators are also currently probing various crypto platforms in response to the misappropriate management of the crypto firms, regulatory pressure is the key factor behind Paxos’s decision to exit the regime.
In February, Paxos received a notice from US Securities and Exchange Commission (SEC) in line with investigations into the platform over its BUSD’s partnership with the Binance exchange.
Additionally, the New York Department of Financial Services (NYDFS) ordered the fintech company to stop the further issuance of BUSD stablecoin as the agency alleged BUSD is an unregistered security.