Canadian Crypto Exchange Guide

I'm Scott McGregor @scottrates on Twitter. Welcome to the hot wallet podcast. Conversations about active investing and digital assets. Be sure and check us out on our website at hotwallet.ca we have over 30 episodes with broad-based topics, interviews and commentary, and blogs. Or follow this podcast or whatever platform you're getting it on right now so you get notified when a new episode drops. 

Canada is losing another Crypto Exchange. Last week Buybit released a notice on their exit from the Canadian market. This marks the second major exchange to leave the country in light of what they are calling a recent regulatory development. Binance announced a few weeks ago they would also leave Canada amid crypto regulations. This gives Canadians fewer options to trade Bitcoin and Crypto on, but it’s not all bad, I’ll give you a list of registered Exchanges that aren’t leaving in just a minute. 

The main question is why? 

In December of 2022, the Canadian Securities Administrators provided an update to an August 2022 note that it expected commitments from unregistered crypto trading platforms operating in Canada while they pursue registration. These commitments were to be made to their principal regulator in the form of a pre-registration undertaking, also known as a (PRU). 

A pre-registration undertaking is a document that outlines the terms and conditions that a crypto exchange must agree to while it pursues registration. Some of these terms and conditions include holding Canadian clients' assets with an appropriate custodian and segregating them from the exchange's own assets. Remind you of FTX anyone? They also prohibit offering margin or leverage for any Canadian client.

Some crypto exchanges have found these requirements too burdensome or costly to implement, especially if they are based outside of Canada. 

Essentially they are asking Crypto exchanges to comply with the same regulations as money service businesses, which include due diligence, reporting, verification, and record keeping. These requirements are meant to protect Canadian investors and prevent illicit activities through crypto transactions.

The CSA has also stated that stablecoins, or stablecoin arrangements, may constitute securities and/or derivatives. Stablecoins, for those who are unaware, are a type of cryptocurrency that are pegged to a fiat currency or another asset to maintain a stable value. The CSA says that crypto exchanges are prohibited from permitting Canadian clients to trade or obtain exposure to any crypto asset that is itself a security and/or a derivative.

BuyBit says Canadian customers will no longer be able to make new deposits or enter into new contracts or increase any of their existing positions for all products and services they can however withdrawal and reduce their positions. Anyone impacted by this announcement should close their account and wind down their positions by September 30th, 2023.

A few weeks ago the world's largest exchange Binance also announced they would exit the great white north, siting new guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canadian market no longer tenable for Binance at this time saying they put off this decision as long as they could to explore other reasonable avenues to protect Canadian users, but it has become apparent that there are none. Canadian users of Binance have until September 30th to close out their positions or move their tokens. 

Now I personally have been winding down my positions in Binance over the last few weeks. I started before the announcement from Binance because I noticed that I was unable to buy anything. I didn't receive any indication from Binance that there was a problem with my account and when I contacted customer support they said they didn't see anything on their end either. But I noticed I was unable to do spot purchases of Bitcoin using my bank card and so I took that as a sign over the last few months and have been moving the tokens I had on Binance to either another exchange or a self-custody wallet. Binance says that despite Canada being a relatively small market, it always held a special place in founder CZ's heart because CZ is Canadian. 

Now this doesn't mean that there aren't many other options to buy Bitcoin, crypto, and digital assets in Canada. Here are some that are not leaving…please note this is not an endorsement or recommendation. 

One of my favorite regulated exchanges to use is Shakepay., It's super simple to send an email money transfer to ShakePay to buy either Bitcoin or Ethereum. You can also shake your phone and get satoshis every single day which is kind of neat. 

Bitbuy is another Canadian exchange that you can use. They offer Bitcoin, Ethereum, Cardano Solana, Polkadot, Dogecoin, Polygon, and the like and you can fund your account with either a bank wire or Interact. Bitbuy claims, 90% of their crypto is held in cold storage and covered by a comprehensive insurance policy. They also allow staking for Polkadot, Ethereum, Polygon Solana, and others that are coming soon.

Coinbase is also legal in Canada. Though they are going through some issues with the security exchange Commission in the United States, most of which is because of Staking. Now, despite some of their fees being high, it's been relatively solid in my experience for spot buys and easy transfers to self-custody wallets. I also have the Coinbase wallet which is a self-custody wallet and it's been fine. 

Kraken is another exchange I've used in the past. Their app is intuitive and simple to use. They have good trading volumes, a large selection of crypto, and high APY staking rewards, like up to 22% on Cosmos 18% on Kusama 21% on Polkadot, and flexible yearly rewards for Ethereum and others. They also have access to NFTs futures and a pro tier with high-quality customizable charts real-time price action and order flow information. 

Finally, Gemini is available in Canada with access to regular players including Bitcoin cosmos dogecoin avalanche polkadot, filecoin, chainlink, Aave, and other top tokens. I've used it a few times in the past but it's very basic and in most cases, there is a delay between when you buy and when you're allowed to move those tokens off the exchange. 

So despite some of the biggest exchanges leaving Canada, there are still many options for Canadian crypto bros and broettes.. to actively invest or hold, whatever you fancy. Be sure and pay attention to the different fees that each of the exchanges charge and consider storing your crypto in a self-custody wallet that you control and you hold the keys to. 

None of this is an endorsement of any of the exchanges that I have mentioned. Even the ones that I have you used or used currently. Please do your own research and decide what makes the most sense to you for your investing style, strategy, and time frame.