The Canadian Securities Administrators (CSA) announced in December that they would be reinforcing their approach to monitoring crypto currency trading platforms by expanding the standards already in place for platforms operating in Canada.
To conform with guidelines from the Ontario Securities Commission (OSC), an autonomous body that oversees the financial system in Ontario, one of the leading global exchanges, Crypto.com, has revealed its decision to delist Tether's USDT stablecoin for Canadians.
Crypto.com is one of the most prominent companies in the crypto currency industry. As of the 31st of January, Canadian citizens will no longer have access to USDT on Crypto.com, and any accounting entries on the stablecoin will be put on hold until further notice. The remaining balance in USDT will be changed to USDC at this time.
An email was sent to all exchange users to inform them of the decision.
As stated (1) by a spokeswoman for Crypto.com, the move is in reaction to an increase in the attention placed on centralized exchanges globally, and Canada is not an exception. The Canadian Securities Administrators (CSA) announced in December that they would be reinforcing their approach to monitoring crypto currency trading platforms by expanding the standards already in place for platforms operating in Canada.
This is what the press release says:
"“The CSA continues to monitor and assess the presence and role of stablecoins in Canadian capital markets. As a result of this ongoing work, the CSA is of the view that stablecoins, or stablecoin arrangements, may constitute securities and/or derivatives. Crypto trading platforms that are registered or that have entered into a pre-registration undertaking are reminded that they are prohibited from permitting Canadian clients to trade, or obtain exposure to, any crypto asset that is itself a security and/or a derivative.”
The Canadian Securities Administrators (CSA) also reminded everyone that crypto currency trading platforms must have
"established policies and procedures to determine whether each crypto asset they provide exposure to is a security and/or derivative."
The CSA included a section on stablecoins as one of its six strategic goals (2) in the business plan it developed for 2022-2025. The Canadian Securities Administrators (CSA) mission is to monitor and evaluate the presence of stablecoins in Canadian financial markets and their role in those markets and to work together to identify and react to legal consequences and hazards.
USDT Under Scrutiny
Tether is still impacted by the failure of Terra/Luna USD and the crash of the FTX exchange in 2022, despite its greatest market cap among stablecoins at $66.28 billion. This is because Tether was the largest stablecoin before these events. As a result of the failures, regulators worldwide have concluded that Tether needs to be provided with the appropriate transparency.
In September 2022, a judge in New York, Katherine Polk Failla, had issued an order requiring Tether to present evidence of the USDT underpinning of its crypto currency. These consisted of account balances, accounting records, cash-flow records, statements of income, profit and loss statements, and other financial documents.
Additionally, Tether was obliged by the order to disclose information regarding the accounts it maintains on the crypto currency exchanges Bitfinex, Poloniex, and Bittrex.
In addition, the Coinbase Inc exchange contacted its customers and asked them to convert their USDT stablecoins into USD Coin. Even the currency conversion fees were completely waived.