Prominent cryptocurrency exchange Binance has been reprimanded by authorities in Canada’s Ontario province for telling users that it was allowed to continue trading there, despite lacking the registration to do so.
The Ontario Securities Commission released a statement on Thursday, pointing out that “Binance is not registered under securities law in Ontario. This means they are not authorized to offer trading in derivatives or securities to persons or companies located in the province.”
Binance had told OSC staff that no new transactions involving Ontario residents would take place after December 31, 2021. However, in a recent message to users, Binance said it “has been successful in taking its first steps on the regulatory path by registering in Canada” and claimed that the registration allowed the company to continue its operations in Canada, Bloomberg News reported.
“As a result of ongoing and positive cooperation with Canadian regulators, there is no need for Ontario users to close their accounts by December 31, 2021,” Binance’s letter stated.
“This is unacceptable,” the OSC said in its statement, adding that Binance had issued the notice to its users without consulting the OSC.
No entity within the Binance group holds any form of securities registration in the province of Ontario, which means the company could be subject to action, including temporary orders, to ensure compliance with local regulations.
In response to questions, Binance told CoinDesk that it had been a case of miscommunication, adding, “it is our top priority to speak to the Ontario Securities Commission and we will seek to remedy this misunderstanding as soon as possible.”
In late June, the China-founded company told users it would be exiting Ontario, making it the first major foreign crypto exchange to do so in response to the province’s stricter regulation of crypto companies.
The OSC listed six platforms that are registered in Ontario, including Wealthsimple, Coinberry, Netcoins, CoinSmart, Fidelity and Bitbuy.
Canada is hardly the only country tightening regulations for cryptocurrency exchanges. The latest news comes amid a global crackdown in the industry.
In the UK, Binance suffered some bad press following a Financial Conduct Authority warning against using the services of its subsidiary Binance Markets Limited.
The warning meant that Binance was not allowed to undertake any regulated activity in the UK. For some time, the company blocked sterling withdrawals in the UK before quietly resuming the feature in August.
In addition, the company was one of the cryptocurrency exchanges forced to leave South Korea after that nation’s government introduced stricter rules for the industry in September.
China has fully banned any action related to digital coins, including mining and trading. As a result, Binance – which was founded in China – has been banned from operating in the country.
Meanwhile, in the US, President Joe Biden’s administration recently passed a new cryptocurrency tax law. The bill requires brokers to report information on all transactions over $10,000 to the Internal Revenue Service.
Binance CEO Zhao Changpeng welcomed the law, saying that “regulation and innovation are not mutually exclusive. We want to do everything possible as an industry to work with regulators and world leaders to identify what is going to be the effective regulatory policy that, most importantly, protects users and spurs innovation.”
The lack of regulation in the cryptocurrency industry has long been pointed out as a significant barrier to broader adoption of the technology, according to a recent GlobalData report on blockchain.
Binance, arguably the world’s largest cryptocurrency exchange, has been expanding rapidly in recent years. A GlobalData report shows that the company has been involved in various M&A deals in the past two years, having bought digital asset platforms and wallets such as WazirX, CoinMarketCap and Swipe.
Earlier this year, the cryptocurrency exchange announced that it was aiming to go public within the next three years. The news of the planned float came a mere month after Brian Brooks publicly resigned from his role as chief executive of the US arm, four months after taking up the role.