Crypto exchange Kraken recently announced its plans to suspend trading, deposits, and withdrawals for select stablecoins in Canada. This move follows the footsteps of other Canadian exchanges that have implemented similar measures due to regulatory guidelines concerning the legal status of these tokens.
In an email sent to CryptoPotato, Kraken revealed that it is now “required” to suspend transactions involving Tether USD (USDT), Dai (DAI), Wrapped Bitcoin (WBTC), Wrapped Ether (WETH), and Wrapped Axelar (WAXL) in Canada. As of November 30, 12:00 p.m. EST, trading and deposits for these coins will no longer be available. Withdrawals, on the other hand, will cease on December 4 at 11:00 a.m. EST. Any remaining assets will be converted into USD at the prevailing market rate on December 5.
The Canadian government’s regulatory guidance has influenced Kraken’s decision, as well as the actions taken by other exchanges. Back in April, Coinbase discontinued support for stablecoins, such as USDT, RAI, and DAI, stating that they did not meet the platform’s listing standards. Crypto.com also halted stablecoin trading in January, citing instructions from the Ontario Securities Commission (OSC). It is worth noting that Coinbase emphasizes that its platform does not list securities.
The Canadian Securities Administrators (CSA) declared in December that any value-pegged crypto assets are considered securities. This stance restricts crypto trading platforms from allowing Canadian clients to trade or gain exposure to securities or derivatives. While the United States’ market regulators are currently debating the legal status of stablecoin assets, Canadian regulators have taken a more stringent approach.
The suspension of stablecoin trading in Canada has significant implications for the crypto industry. Derivative assets like USDT and WBTC, which are backed by centralized reserves, may face challenges in accessing the Canadian market. Additionally, the regulatory climate surrounding stablecoins may impact the overall adoption and integration of these assets in the country.
Kraken has urged its users holding balances in USDT, DAI, WBTC, WETH, or WAXL to either consider alternative trading pairs offered by the exchange or withdraw their assets before November 30th. This call to action aims to provide users with alternative options to continue trading while complying with the regulatory changes.
Despite regulatory challenges, Coinbase has commended Canadian lawmakers for advancing recommendations that acknowledge citizens’ right to self-custody and recognize the distinctive nature of stablecoins compared to other cryptocurrencies. This recognition demonstrates a willingness to understand and accommodate the evolving crypto landscape while ensuring investor protection and regulatory compliance.
Kraken’s recent decision to suspend stablecoin trading, deposits, and withdrawals in Canada reflects the tightening regulatory environment surrounding these assets. The actions taken by Kraken, Coinbase, and other exchanges are a response to the Canadian government’s guidelines regarding the legal status of stablecoins. While these regulatory measures aim to protect investors and ensure compliance, they also pose challenges for the crypto industry’s growth and adoption in Canada. Moving forward, it will be crucial for regulators, exchanges, and other stakeholders to find a balanced approach that fosters innovation while maintaining investor trust and regulatory integrity.