CoinSmart CEO Comments on Binance Predicament in Canada

CoinSmart Financial Inc., one of the first digital asset trading platforms to be registered as a restricted dealer under securities laws across Canada, has shared some perspective on the Binance Canada predicament.

Earlier today, it was reported that Binance Canada had been registered as a Money Business Service (MBS) in the past week. Following registration, Binance disseminated a note to users in Ontario claiming registration allows them to continue operations in Canada and resume business in Ontario while pursuing full registration. The Ontario Securities Commission (OSC) soon stated that this was not the case and “Binance is not registered under securities law in Ontario” and “not authorized to offer trading in derivatives or securities to persons or companies located in the province.”

Following the news, CoinSmart CEO Justin Hartzman shared some insight into why Binance may have jumped the gun a bit.

Hartzman explained that the OSC/CSA [Canadian Securities Administrators] has taken the stance that the selling/trading of crypto assets is deemed a security. To offer such securities requires you to be a restricted dealer or a marketplace or in the process of becoming such with your principal regulator.

Hartzman said that “Fintrac and MSB licenses are not sufficient to do so.”

“Foreign exchanges like Binance not only are not registered with the CSA but they offer a suite of products that are simply prohibited in the Canadian market as of today. Products such as derivatives, margin, and lending,” explained Hartzman. “MSB does not enable anything of the sort. It is a requirement for the movement of money and the reporting that goes with that. This is key for AML(Anti Money Laundering) and an important addition and requirement to a proper licensing. MSB does not give you the ability to spot sell/trade crypto currency while not engaged with regulators.”

Asked what actions the OSC may take in light of Binance’s statements, Hartzman said they have seen the OSC levy fines on foreign non-compliant exchanges.

“The non-adherence to their original discussions to leave Ontario may have long-lasting effects with local and other regulators globally.”

As Binance Canada has provoked the OSC, we asked for his thoughts as to what the crypto exchange may decide to do next. He said they may choose to simply ignore and keep moving, due to their size but he agrees with the OSC’s stance:

“It is necessary and levels the playing field for local exchanges and those looking to comply internationally.”

Hartzman is a firm believer that digital asset exchanges must be regulated and comply with the rules.

“Both CoinSmart’s and my personal stance since day one has been a regulatory first commitment. Although there is no doubt growth and innovation can be stifled due to over-regulation, I have a deep belief in progressive regulation and the need for it. It is vital to create a safe, transparent, and trusted environment for all Canadian investors. I know a foundation based on regulation will be what helps build a long term profitable business not only here in Canada but worldwide.”

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