Bitstamp, one of the oldest and largest cryptocurrency exchanges in the world, has announced that it will cease its operations in Canada by the end of January 2024. The decision comes as a result of the regulatory uncertainty and compliance challenges that the company faces in the Canadian market.
In a blog post published on October 12, Bitstamp explained that it has been working hard to meet the expectations and requirements of the Canadian authorities, but that the situation has become untenable. The company said that it has received multiple requests for information and documentation from various regulators, some of which are contradictory or incompatible with its global standards and policies.
Bitstamp also cited the lack of clarity and consistency in the Canadian crypto regulatory framework, which has led to confusion and frustration among its customers and partners. The company said that it values its Canadian community and regrets having to leave, but that it has no other choice given the current circumstances.
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Bitstamp assured its Canadian customers that they will be able to withdraw their funds and close their accounts before the deadline of January 31, 2024. The company also said that it will continue to monitor the developments in Canada and hopes to return in the future if the conditions improve.
Bitstamp is not the first crypto exchange to exit Canada due to regulatory hurdles. In 2019, Kraken and Poloniex also withdrew from the country, citing similar reasons. The Canadian crypto industry has been struggling with a lack of clear and consistent rules and guidance from the authorities, as well as a high level of scrutiny and enforcement actions.
The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have proposed a framework for regulating crypto platforms in 2019, but it has not been finalized or implemented yet. The proposed framework would require crypto platforms to register as securities dealers or marketplaces, depending on their activities, and comply with various rules and obligations regarding investor protection, market integrity, anti-money laundering, and capital adequacy.
However, some crypto platforms have argued that the proposed framework is too restrictive and does not reflect the nature and innovation of the crypto sector. They have also complained about the lack of consultation and collaboration between the regulators and the industry stakeholders.
The Canadian government has also announced its intention to introduce new legislation to regulate crypto assets and activities in 2020, but it has not been tabled or passed yet. The proposed legislation would amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to include crypto businesses as reporting entities, subject to record-keeping, verification, and reporting obligations.
The uncertainty and complexity of the Canadian crypto regulatory landscape have created significant challenges and risks for crypto platforms operating in the country, as well as for their customers and partners. Bitstamp’s decision to end its Canadian services is a sign of the difficulties that the industry faces in navigating the regulatory environment and complying with the evolving expectations and requirements of the authorities.
Bitfinex owner offers to buy back shares worth $150 million
Bitfinex, one of the largest cryptocurrency exchanges in the world, is facing a major crisis after losing access to $850 million of its funds. The exchange has been accused of covering up the shortfall by using funds from its affiliated stablecoin issuer, Tether.
In an attempt to restore confidence and liquidity, Bitfinex’s owner, iFinex Inc., has launched a token sale to raise $1 billion from private investors. According to Bloomberg, iFinex has also offered to buy back some of the tokens at a 27% premium after a year, which would amount to $150 million.
The token sale, which is expected to close by the end of this month, has attracted interest from several large investors, including Zhao Dong, a prominent Chinese bitcoin billionaire. Zhao said that he has already invested $10 million in the tokens and plans to invest more.
The buyback offer is seen as a sign of iFinex’s confidence in its ability to recover the frozen funds and resolve its legal issues. The company is currently facing a lawsuit from the New York Attorney General, who alleges that it violated state laws by engaging in fraud and misleading investors.
Bitfinex has denied any wrongdoing and said that it is working with authorities to unfreeze the funds, which are held by a third-party payment processor called Crypto Capital Corp. Bitfinex claims that Crypto Capital has been unable to process its withdrawal requests due to government seizures and investigations in multiple countries.
The token sale and the buyback offer are part of Bitfinex’s efforts to regain trust and stability in the crypto market, which has been shaken by the scandal. Bitfinex is one of the oldest and most influential exchanges in the industry, with a daily trading volume of over $1 billion. Its affiliated stablecoin, Tether, is also widely used as a medium of exchange and a store of value in the crypto space.
However, some analysts and critics have expressed doubts about Bitfinex’s solvency and transparency and warned that the token sale could pose risks for investors. They argue that the tokens are essentially unsecured debt instruments that have no legal protection or recourse. They also question whether Bitfinex will be able to honor its buyback offer, given its uncertain financial situation and regulatory challenges.