Canada

Sam Bankman-Fried arrested and consented to the extradition — Law Decoded, Dec. 12-19.

December 19, 2022 Coin Telegraph

Canada

The entrepreneur reportedly reconsidered his earlier decision to contest extradition and now would be able to appear in a United States court.

Welcome to Law Decoded, your weekly digest of all the major developments in the field of regulation.

The FTX drama escalated last week when the Royal Bahamas Police Force arrested its former CEO, Sam Bankman-Fried, at the request of the United States government. Within hours, politicians, crypto executives and influencers had all booted up their Twitter apps to comment on the arrest of the former CEO, who had to miss his testimony before the U.S. Congress. However, the text of SBF’s planned testimony was obtained by the media, wherein he blamed the inclusion of FTX.US in the Chapter 11 bankruptcy on John J. Ray III, a restructuring lawyer who assumed the role of FTX CEO after the bankruptcy filing.

The body of allegations against FTX and SBF personally is stacking up. The United States Securities and Exchange Commission (SEC) charged Bankman-Fried with violating the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. At the same time, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Sam Bankman-Fried, FTX and Alameda Research, claiming violations of the Commodity Exchange Act and demanding a jury trial. A fresh indictment, signed by United States Attorney for the Southern District of New York Damian Williams, is 14 pages long and contains eight counts.

Bankman-Fried reportedly reconsidered his earlier decision to contest extradition and is expected to appear in court in the Bahamas on Dec. 19 to seek a reversal. By consenting to extradition, he would be able to appear in a United States court, where If convicted, he could get up to 115 years in jail. However, there is a “lot to play out” in the case until he gets a final sentence within the next few months or even years, legal commentators told Cointelegraph.

Senators Warren and Marshall introduce money-laundering legislation for crypto

U.S. Senators Elizabeth Warren and Roger Marshall introduced the Digital Asset Anti-Money Laundering Act of 2022. The seven-page bill would expand the classification of a money service business (MSB), prohibit financial institutions from using technology such as digital asset mixers and regulate digital asset kiosks, otherwise known as ATMs.

Money service businesses would be required to have written Anti-Money Laundering policies and to implement them. The bill would finalize reporting requirements already proposed by FinCEN and impose new requirements, including reporting transactions over $10,000 in accordance with the Bank Secrecy Act.

Canada bans crypto leverage and margin trading

The Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, issued an update to crypto trading platforms operating in the country. According to the statement, all crypto trading firms operating in Canada — both local and foreign ones — have to comply with newly expanded terms, which ban them from offering margin or leverage trading services to any Canadian clients. The expanded terms also require crypto exchange services providers in Canada to segregate custody assets from the platform’s proprietary business.

Nigeria set to pass bill recognizing Bitcoin and cryptocurrencies

The Nigerian government will reportedly soon pass a law that will recognize the usage of Bitcoin (BTC) and other cryptocurrencies as a means to keep up to date with global practices. If the Investments and Securities Act 2007 (Amendment) Bill is signed into law, it would allow the local Securities and Exchange Commission to “recognize cryptocurrency and other digital funds as capital for investment.”

The report comes almost 24 months after Nigeria banned crypto activity in February 2021, with the Central Bank of Nigeria (CBN) ordering local crypto exchanges and service providers to cease activity and mandating banks to shutter the accounts of any individuals or entities found to be engaging in trading activities.

Nasdaq warns Bitcoin mining firm Bitfarms about share price deficiency

December 14, 2022 Coin Telegraph

Bitcoin mining

Bitfarms has an initial period of 180 calendar days to have its shares trading above $1 for at least 10 days before June 12, 2023.

The Canadian Bitcoin (BTC) mining firm Bitfarms is facing compliance challenges over its listing on Nasdaq due to the ongoing cryptocurrency winter.

Bitfarms received a warning notification from Nasdaq on Dec. 13 because the company’s share price has stayed below $1 for 30 consecutive working days.

Announcing the news on Dec. 14, Bitfarms said that it has an initial period of 180 calendar days to regain compliance with the requirements from Nasdaq.

In order to regain compliance, Bitfarms’ shares should close at $1 per share for a minimum period of 10 consecutive days at any time before June 12, 2023. In such an event, the Nasdaq staff will provide written notification to Bitfarms that it has achieved compliance, the announcement notes.

The 180-day period is not the final limit, however. Bitfarms noted that it will have a chance to extend the compliance period further even after June 12, stating:

“If the company does not regain compliance with Rule 5550(a)(2) by June 12, 2023, the company may be eligible for an additional 180 calendar day compliance period.”

The company stressed that the Nasdaq letter is only a notification and has no immediate effect on the listing or trading as the Bitfarms shares (BITF) will continue to trade on the exchange.

Bitfarms also noted that the company remains to be listed on the Toronto Stock Exchange and the latest notice from Nasdaq has no impact on the firm’s compliance status with such listing or its business operations.

As previously reported by Cointelegraph, Bitfarms debuted stock trading on Nasdaq in June 2021, just a few months after going public on the Toronto Stock Exchange in April.

After reaching an all-time high at roughly $6 in December 2021, the Bitfarms stock has been gradually selling out on Nasdaq, in line with the ongoing cryptocurrency bear market.

*Bitfarms’* *stock on* *Nasdaq* *one-year chart. Source: TradingView*

According to data from TradingView, Bitfarms’ shares dropped below $1 in late October 2022 and have not retested the $1 price mark since. Bitfarms’ stock closed at $0.54 on Dec. 13, seeing a 7.6% increase over the day.

Bitfarms is one of many cryptocurrency mining companies facing major issues due to the ongoing crisis in the market. In June, the firm was forced to sell about $62 million worth of self-mined Bitcoin in order to reduce its debt. A number of other mining firms, including Argo Blockchain, Core Scientific and Riot Blockchain, also opted to sell their Bitcoin amid tough market conditions.

On Dec. 12, Argo Blockchain said that it has been considering selling its assets in order to avoid filing for bankruptcy.

Canada bans crypto leverage and margin trading after FTX collapse

December 13, 2022 Coin Telegraph

Canada

Now-bankrupt exchange FTX attempted to enter Canada in June 2022, but local regulators have managed to prevent the mess.

Authorities in Canada are taking measures to better protect Canadian cryptocurrency investors in the aftermath of the FTX collapse and the spreading contagion.

The Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, on Dec. 13 issued an update to crypto trading platforms operating in the country.

The CSA said that the authority has been reinforcing its approach to the supervision of crypto trading platforms by expanding existing requirements.

According to the statement, all crypto trading firms operating in Canada — both local and foreign ones — have to comply with newly expanded terms, which ban them from offering margin or leverage trading services to any Canadian clients.

The expanded terms also require crypto exchange services providers in Canada to segregate custody assets from the platform’s proprietary business.

“Custodians will generally be considered qualified if they are regulated by a financial regulator in Canada, the U.S., or a similar jurisdiction with a supervisory regime for conduct and financial regulation,” the CSA noted in the statement.

The council emphasized that even with the adoption of these measures, crypto assets or any financial products related to crypto assets are high-risk investments, urging investors to only invest using a platform that is registered with CSA members.

The CSA did not immediately respond to Cointelegraph’s request for comment.

In the new statement, the CSA mentioned its previous communication to crypto trading platforms operating in Canada, issued on Aug. 15, 2022. The authority stated that it expected commitments from unregistered crypto trading platforms operating in Canada while they pursue registration in the form of pre-registration undertaking.

The CSA communication came shortly after FTX entered into an agreement to purchase the Canadian crypto platform Bitvo in June 2022. FTX originally planned to use the acquisition as part of its global expansion plans. However, Bitvo eventually managed to terminate the acquisition by the now-defunct exchange, which allowed the firm to continue operating even after FTX’s collapse.

Bitvo CEO Pamela Draper told Cointelegraph in November that the acquisition wasn’t completed because the firms were working to satisfy the closing conditions, the most significant of which was regulatory approval from the Alberta Securities Commission.

Manitoba Halts New Crypto Mining Projects Due to Expected High Energy Demand

December 1, 2022 Bitcoin.com

Canada crypto regulation: Bitcoin ETFs, strict licensing and a digital dollar

November 26, 2022 Coin Telegraph

Bitcoin Price

The first and the last major attempt to encourage a comprehensive crypto framework was buried in the House of Commons on Nov. 23.

In October, Toronto-based Coinsquare became the first crypto trading business to get dealer registration from the Investment Industry Regulatory Organization of Canada (IIROC). That means a lot as now Coinsquare investors’ funds enjoy the security of the Canadian Investment Protection Fund in the event of insolvency, while the exchange is required to report its financial standing regularly.

This news reminds us about the peculiarities of Canadian regulation of crypto. While the country still holds a rather tight process of licensing the virtual asset providers, it outpaces the neighboring United States in its experiments with crypto exchange-traded funds (ETFs), pension funds’ investments and central bank digital currency (CBDC) efforts.

An era of restricted dealers

Coinsquare, which happens to be Canada’s longest-operating crypto asset trading platform, benefits from its new legal status as none of its competitors can currently boast the same legal footing. By publishing time, all other local players must have the status of a “restricted dealer,” signaling that they’ve made their registration bid and now await IIROC’s decision.

The Guidance for Crypto-Asset Trading Platforms was introduced by IIROC and the Canadian Securities Administrators (CSA) in 2021. It requires crypto businesses dealing with security tokens or crypto contracts to register as “investment dealers” or “regulated marketplaces.”

All local companies have been given a two-year transitory period, during which they should start the registration process and, in some cases, obtain the “restricted dealer” temporary registration.

The list of “restricted dealers” that have been granted a two-year relief period to operate amid the ongoing registration process is rather short and includes mainly local companies, such as Coinberry, BitBuy, Netcoins, Virgo CX and others. These companies still enjoy a right to facilitate buying, selling and holding of crypto assets, but what lies ahead of them is the stringent compliance procedure necessary to continue their operations after 2023. For example, Coinsquare had to obtain an insurance policy that includes an endorsement of losses of crypto assets and fund a trust account maintained at a Canadian bank.

The prosecutors have been watching closely for any non-compliance. In June 2022, the Ontario Securities Commission (OSC) issued financial penalties against Bybit and KuCoin, claiming violation of securities laws and operating unregistered crypto asset trading platforms. It obtained orders banning KuCoin from participating in the province’s capital markets and fining the exchange for more than $1.6 million.

The land of experiments

At the same time, there are adoption cases in Canada that sound radical to the United States. For example, there are dozens of crypto ETFs to invest in the country, while Grayscale still has to lead the court battle with the U.S. Securities and Exchange Commission (SEC) for a right to launch its first ETF.

The world’s first Bitcoin (BTC) ETF for individual investors was approved by the OSC for Purpose Investments back in 2021. Purpose Bitcoin ETF accumulates around 23,434 BTC, which is actually a prominent symptom of the bear market. In May 2022, it held around 41,620 BTC. The major outflow from the Purpose Bitcoin ETF occurred in June, when about 24,510 BTC, or around 51% of its asset under management, were withdrawn by investors in a single week.

Recent: FTX’s collapse could change crypto industry governance standards for good

Another breakthrough in Canadian crypto adoption erupted when the country’s largest pension funds started to invest in digital assets. In 2021, the Caisse de Depot et Placement du Québec — one of the largest pension funds in the French-speaking province of Quebec — invested $150 million into Celsius Network.

The same month, the Ontario Teachers’ Pension Plan announced its $95-million investment in FTX. Unfortunately, this news didn’t age well as both companies have since collapsed and both pension funds had to write off their investments. Perhaps, in that light, the U.S. Department of Labor’s warning to employers against using pension funds that include Bitcoin or other cryptocurrencies now seems like a prudent precaution.

Due to its cold climate, cheap electric supply and light regulation, Canada is among the world’s leading destinations for crypto mining. In May 2022, it accounted for 6.5% of the global BTC hash rate. However, this fall, the firm managing electricity across the Canadian province of Quebec, Hydro-Québec, requested the government to release the company from its obligation to power crypto miners in the province. As the reasoning goes, electricity demand in Québec is expected to grow to the point that powering crypto will put pressure on the energy supplier.

The development of the CBDC is another direction where Canada has been moving faster than its neighbor to the south. In March 2022, the Bank of Canada launched a 12-month research project focused on the design of the Canadian digital dollar in collaboration with the Massachusetts Institute of Technology.

In October, the Bank of Canada published a research report and proposed several particular archetypes of CBDC as useful for organizing “the possible CBDC designs.” While back in March, there was “no decision made on whether to introduce a CBDC in Canada,” the country’s recent budget amendment contains a small section on “Addressing the Digitalization of Money.” In the statement, the government said consultations with stakeholders on digital currencies, stablecoins and CBDCs are being launched on Nov. 3, although exactly which stakeholders will be engaged remains unclear.

The partisan divide

The discussion of what could have become Canada’s formal legal framework for crypto — bill C-249 — showed a sharp partisan divide around the topic. A bill for the “encouragement of the growth of the cryptoasset sector” was introduced to the House of Commons in February 2022 by a member of the Conservative party and ex-Minister Michelle Garner. The lawmaker proposed having Canada’s Minister of Finance consult with industry experts to develop a regulatory framework aimed at boosting innovation around crypto three years after the bill’s passage.

Despite the voiced support from the local crypto community, the bill didn’t meet much approval among fellow lawmakers. During the second reading on Nov. 21–23, members of other political parties, including the ruling Liberal party, blasted both the proposition and the Conservative party with accusations of promoting the “dark money system,” and Ponzi scheme and bankrupting retirees and as a result, C-249 is now officially buried.

While Michelle Garner introduced the bill, Conservative party leader Pierre Poilievre took most of the heat. A former Minister of Employment and Social Development, Poilievre has been advocating for more financial freedom through tokens, smart contracts and decentralized finance. Earlier this year, he urged the Canadian public to vote for him as their leader to “make Canada the blockchain capital of the world.”

The next general elections in Canada are scheduled for 2025, and given C-249’s failure and the general condition of the market, it’s not likely that Poilievre and the Conservatives will get broad support in the Parliament for their pro-crypto efforts until that time. Currently, the Conservative party holds only 16 out of 105 seats in the Senate and 119 out of 338 in the House of Commons.

What’s next

From a trading platform perspective, there are specific challenges that the industry strives to address, Julia Baranovskaya, chief compliance officer and co-founding team member at Calgary-based NDAX, told Cointelegraph.

The majority of industry stakeholders would like to see “clear guidelines and a risk-based approach.” Currently, a majority of regulatory authorities in Canada have chosen to apply existing financial industry rules and regulations designed and implemented for the traditional financial industry.

However, Baranovskaya highlighted that in recent years, regulators have been engaging in a closer dialogue with the crypto industry. The Securities Commission has created a sandbox and encouraged crypto asset trading platforms and innovative types of businesses offering alternative financial instruments to join. The IIROC has also been leading a dialogue with the industry participants to understand business models better and identify how the current framework can be applied to them.

Recent: Bitcoin miners look to software to help balance the Texas grid

But, the challenges of the fragmented regulatory framework and the lack of crypto asset-specific regulations are still here. Most of the existing regulations are based on the product, but with the constantly evolving crypto space, the product-based approach “would always stay a few steps behind.” In Baranovskaya’s words:

“Understanding the underlying technology behind crypto assets and De-Fi products that work out a flexible but robust regulatory regime that can adjust to the ever-changing crypto asset space is essential.”

IIROC-registered Canadian crypto exchange Coinsquare suffers data breach

November 26, 2022 Coin Telegraph

Canada

On Nov. 19, Coinsquare had to temporarily shut down operations to investigate an unusual activity on its platform.

Just a month after becoming the first Canadian crypto trading platform to get registered by the Investment Industry Regulatory Organization of Canada (IIROC), Coinsquare suffered a data breach that compromised users' personal information.

On Nov. 19, Coinsquare had to temporarily shut down operations to investigate an unusual activity on its platform. However, several days of proactive measures allowed Coinsquare to resume operations gradually.

We will be re-enabling crypto deposits shortly after the maintenance window with crypto withdrawals to follow shortly after.
— Coinsquare (@Coinsquare) November 22, 2022

In a follow-up email to investors, Coinsquare admitted that their customer database with personal information was exposed during the incident, which a third party most likely accessed.

The leaked database included users’ personal information, such as names, email addresses, residential addresses, phone numbers, dates of birth, device IDs, public wallet addresses, transaction history, and account balances. Coinsquare further confirmed that no passwords were exposed, adding that:

“We note that your assets have always been, and remain, secure in cold storage and are not at risk.”

While the exchange has not detected any bad actors from accessing the breached information, the official communication cautions users to change their passwords, enable 2-Factor Authentication (2FA) and use different credentials for different platforms.

Coinsquare has not yet responded to Cointelegraph’s request for comment.

Canadian crypto exchange Bitvo was able to back off its acquisition agreement with FTX thanks to the deal’s long approval process by local regulators.

The firm emphasized that its operations have not been affected, as Bitvo has no material exposure to FTX or any of its affiliated entities.

How to buy cryptocurrency in Canada?

November 22, 2022 Coin Telegraph

Buy Bitcoin

Learn how to buy Bitcoin and other cryptocurrencies in Canada via brokers or directly through a crypto exchange.

Purchasing cryptocurrencies like Bitcoin (BTC), Dogecoin (DOGE) or Ether (ETH) in Canada is on an upsurge as crypto ownership rises. Moreover, the Ontario Securities Commission, in their report, stated that more than 30% of Canadians plan to buy crypto assets in 2023.

So, if you are wondering how to buy Bitcoin or crypto in Canada, then read on and familiarize yourself with the details.

Is it legal to buy cryptocurrency in Canada?

Cryptocurrency trading is legal in Canada even though it is not yet considered a legal tender. Canada Revenue Agency (CRA) specifies what virtual currencies are and provides information on all applicable taxes. One can choose to shop in cryptocurrency in Canada if retailers, coffee shops or e-commerce websites accept it.

The CRA treats cryptocurrency like a commodity that can result in capital gains or losses. Taxable transactions include sending, receiving and trading cryptocurrencies. Canada Securities Administrators’ website details how your crypto assets are regulated in Canada.

Do Canadian banks allow cryptocurrency?

With the growing popularity of cryptocurrencies, Canadian banks do allow and recognize cryptocurrency trading subject to federal and state regulations. For instance, Canadian banks have installed 2600+ Bitcoin ATMs, with Toronto at the highest with 897 ATMs. These ATMs allow people to convert their physical money into digital currency and buy and sell cryptocurrency in exchange for cash. Canada ranks second worldwide in Bitcoin ATMs after the United States.

Some popular Canadian banks which support crypto trade in one way or the other include the National Bank of Canada, Canadian Imperial Bank Of Commerce, Royal Bank of Canada, Scotiabank, ATB and Coast Capital, among many others also joining in as the crypto popularity in Canada continues to rise.

Bitcoin ATM in Toronto

Banks allow purchasing crypto using a debit card, Interac e-transfer or bank wire transfer. Customers are required to link their bank accounts with a cryptocurrency exchange for buying cryptocurrencies using the Canadian dollar or other popular fiat currencies.

Credit cards can also be used to purchase crypto. However, this option can be expensive since banks may charge higher interest rates and additional cash advance fees on crypto credit card purchases.

Ways to buy cryptocurrency in Canada

Two common ways to buy cryptocurrency in Canada include either through a broker or directly through an exchange. However, cryptocurrency exchanges give the account holder more control over their crypto while brokers like Wealthsimple and Mogo may put restrictions on holdings, withdrawals, transfers and storage depending on their brokerage policy.

Crypto brokers in Canada are very similar to a traditional finance trading platform. They aim to simplify the process and reduce complexities through their platforms and their expertise in the cryptocurrency field. However, this convenience comes at a cost, as they do charge higher fees for their services in comparison to the crypto exchanges.

Steps to buy cryptocurrency in Canada through a crypto broker

The below steps explain how to buy cryptocurrencies via brokers if one doesn’t want to trade using a crypto exchange.

Step 1: Set up an account on a crypto trading platform

Select a crypto trading platform of your choice, go to its website or download the application and sign up. Create an account with a valid email and phone number and fill in the requisite personal information details to verify your account.

Step 2: Add funds to your account

Most crypto broker platforms have many options for payment methods to load trading funds with a debit card, credit card, PayPal, wire transfer or gift cards. Transfer fees can vary for each method and are usually higher for credit card payments as they are quicker (5-10 minutes usually) and low for wire transfers which can take a few days to load funds.

Step 3: Buy cryptocurrency of your choice

Select the crypto you want to purchase, place an order and the trading platform will find a match for your buy order. However, crypto brokers have a limited basket of currencies to select from and they do not trade in every cryptocurrency unlike crypto exchanges, which offer more choices. There are also restrictions on sell orders and volume, so it is a good practice to check these before investing any funds.

Steps to buy cryptocurrency in Canada using a crypto exchange

The steps below will get the ropes for crypto exchange though each exchange may show slight variations.

Step 1: Pick your exchange

A crypto exchange is a digital marketplace where buyers and sellers can meet and trade different types of cryptocurrencies. Many exchanges will allow trading the Canadian dollar for crypto or exchanging one type of crypto for another. The exchanges that support cryptocurrency trading in Canada are Coinbase, Binance, Crypto.com, Kraken, KuKoin, Bitbuy and Coinberry.

Step 2: Create an account

After selecting an exchange, sign up with a valid email and phone number to open an account. Verification documents including driver’s license and passport will need to be uploaded. Most exchanges will ask for a selfie to check for a face match with the documents submitted for verifying a person’s identity.

Step 3: Deposit cash and buy cryptocurrency

Once the account is activated, link a bank account and deposit funds into this newly opened crypto account. With the funds ready, place a crypto buy order and purchase any cryptocurrency from the ones available on the exchange. Most people buy BTC in Canada but the market is also flooded with altcoins like Binance Coin (BNB) or Solana (SOL).

Similarly, one may also sell crypto on these exchanges and convert to fiat and withdraw in the linked bank account. Bitcoin ATMs are another way to convert cryptocurrency to cash in Canada. However, not all ATMs have this facility and many charge high service fees.

How to store cryptocurrency in Canada?

It is important to store and secure crypto assets because unlike fiat, they are not guarded by any insurance protections like the Canada Deposit Insurance Corp. Risks of thefts, hacking, scams or cyberattacks are high and hence it is important to secure safe storage for your crypto. Several ways for storing crypto in Canada include:

On the exchange

Leave the crypto on the exchange and earn passive income from staking and farming. Staking helps earn crypto interest by locking the cryptocurrency holdings on the exchange, while farming helps to earn more cryptocurrencies using existing crypto assets on the exchange.

Turn on the two-factor authentication, or 2FA, in the security settings of the account login to provide that extra layer of security. Risk can also be reduced by spreading the crypto assets across multiple exchanges. Nonetheless, as centralized exchanges have been known to change policies, rules or cease operations, storing on multiple exchanges may spread the risk of losing all assets in the event of a hack, seizure or closure of an exchange.

Crypto wallets

Crypto wallets hold the ‘private keys,’ or a password for access to the cryptocurrency assets. So, crypto wallets do not actually store your crypto, but they hold the keys that provide access to your digital money living on the blockchain. It is possible to hold multiple coins in one wallet like BTC, ETH, DOGE or any other altcoins, as supported by that wallet.

However, securing the seed or recovery phrase is significant because it helps to recover private keys in the event one may forget. Losing or forgetting the seed phrase means permanent loss of the stored crypto assets.

Two types of cryptocurrency wallets in Canada or any country are hot and cold wallets.

Hot wallets vs. Cold wallets

MetaMask, Binance Trust Wallet, Coinbase Wallet and CoinSmart are examples of crypto hot wallets in Canada, while cold wallets in use are Ledger and Trezor. One can also strike a balance by storing in a combination of hot and cold wallets as storing large quantities of coins in a single wallet can be quite risky.

How and where to spend cryptocurrency in Canada?

Purchases can be made with BTC and other crypto in Canada at retailers who directly accept crypto payments or through debit or prepaid cards. A 2022 Capterra survey of 1,000 Canadian respondents revealed that 62% of the participants are interested in being paid in crypto in the next five years.

CoinGate accepts a wide range of cryptocurrencies where one can buy gift cards for eBay, Amazon, PlayStation, BestBuy, Airbnb and more. Other retailers that accept crypto payments in Canada include Newegg (gaming products), Travala (travel bookings) and Overstock (home furnishings).

Coincards is another webshop to purchase gift cards for many top brands including BestBuy, Amazon, Air Canada and more. They accept BTC and other cryptocurrencies and offer prepaid cards for shopping on their website.The prepaid card is reloadable and can be topped up with crypto as per customer requirement.

Proactive provisions and clearly defined regulations set Canada apart and provide a benchmark for other nations to foster a crypto-friendly environment with the aim of accelerating cryptocurrency adoption proactively. However, investors should do their own extensive research and be well-versed with the crypto landscape before committing any funds.

FTX acquisition no more: Canadian exchange Bitvo backs off the deal

November 17, 2022 Coin Telegraph

bitcoin regulation

Bitvo has managed to back off its acquisition agreement with FTX exchange thanks to long approval process of the deal from local regulators.

The Canadian cryptocurrency exchange Bitvo has terminated its expected acquisition agreement with FTX to continue operating independently.

Bitvo’s shareholder, Pateno Payments, has discontinued the acquisition deal with FTX Canada and FTX Trading in accordance with the agreement terms, Bitvo announced on Nov. 15.

The firm emphasized that its operations have not been affected as Bitvo has no material exposure to FTX or any of its affiliated entities. Bitvo trading operations, including withdrawals and deposits, are intact.

Bitvo also stressed that it’s not party to the bankruptcy proceedings entered into by FTX and its affiliated entities. Bitvo has also never owned, listed or traded the FTX Token (FTT) or “any similar token,” the announcement notes.

“Since inception, Bitvo has operated as an independent, Canadian crypto asset trading platform,” the company stated, adding that the platform has not been offering lending or borrowing services:

“Bitvo operates on a full reserve basis, meaning it does not lend customer funds. Bitvo has always chosen to operate in this fashion, and it is a requirement of Bitvo’s regulatory status as a Restricted Dealer registered with the Canadian Securities Administrators [...].”

As previously reported by Cointelegraph, the troubled cryptocurrency exchange FTX entered into an agreement to purchase Bitvo in June 2022 as part of the company’s expansion plans in Canada. But the plan went wrong as FTX became subject of a massive industry scandal, with the exchange misappropriating user funds for trading on its sister firm Alameda.

On Nov. 14, Bitvo officially announced that its acquisition by FTX was still a pending transaction that wasn’t closed. “Digital assets are held with independent third-parties BitGo Inc. and BitGo Trust Company, with over 80% of assets held in cold storage,” the company said.

“We are happy the acquisition didn't close, it would have been devastating to our staff, and just as importantly our customers,” Bitvo CEO Pamela Draper told Cointelegraph. The process between the announcement of the deal in June involved working to satisfy the closing conditions, the most significant of which was regulatory approval, she added.

“The Alberta Securities Commission is our principal regulator and Bitvo and FTX were working with them to obtain the required approvals,” Draper said.

While Bitvo appears to have managed to back off the deal, there are some crypto companies that have been affected by the FTX crisis due to being acquired by the crypto mogul.

The FTX-owned crypto exchange Liquid suspended its fiat and crypto withdrawals on its Liquid Global platform in connection with FTX’s issues, according to an official statement released on Nov. 15. FTX acquired the Japanese exchange and its affiliates in February 2022.

Bankrupt crypto lender Voyager Digital took to Twitter on Nov. 16 to update its clients on reorganization efforts following the Chapter 11 filing by FTX and FTX US, stating that customer vote will be canceled and the proposed sale will not move forward. Voyager went bankrupt in July 2022, with FTX US acquiring its assets in September.

FTX US Derivatives, another subsidiary of FTX US formerly known as LedgerX, continued to offer fully-collateralized swaps, futures and options on crypto, CEO Zach Dexter said on Nov. 14. He also pointed out that LedgerX is not included in this bankruptcy filing by FTX. “Customer funds remain safe on the LedgerX LLC derivatives platform, which remains available 24/7,” Dexter noted in another tweet on Monday. As previously reported, FTX US acquired LedgerX in an undisclosed deal in August 2021.

Canada to examine crypto, stablecoins, and CBDCs in new budget

November 4, 2022 Coin Telegraph

Budget

Canada’s government stated its concerns on the risks digital assets and the digitalization of money may pose to its financial system as a reason for launching the consultation.

The Canadian federal government is set to launch a consultation on cryptocurrencies, stablecoins, and Central Bank Digital Currencies (CBDCs) as revealed in its new mini-budget.

The government's “2022 Fall Economic Statement” released on Nov. 3 by Deputy Prime Minister Chrystia Freeland works as a fiscal update in conjunction with its main yearly budget.

The statement included a small section on “Addressing the Digitalization of Money” that outlined the government’s crypto plans.

It said the rise in cryptocurrencies and money digitalization is “transforming financial systems in Canada and around the world” and the country’s financial system regulation “needs to keep pace.”

The statement opined that money digitalization “poses a challenge to democratic institutions around the world” highlighting cryptos use in sanctions avoidance and illicit activity financing both domestically and abroad.

In the statement, the government said consultations with stakeholders on digital currencies, stablecoins, and CBDCs are being launched on Nov. 3 although exactly which stakeholders will be engaged remains unclear.

The announced consultations is understood to be as part of the government’s intention to launch a “financial sector legislative review focused on the digitalization of money and maintaining financial sector stability and security,” which was part of the 2022 budget released on Apr. 7.

This review will also examine the “potential need” of a Canadian CBDC in light of these risks.

In January protests broke out in the nation's capital of Ottawa regarding the COVID-19 vaccine mandate and restrictions in Canada with protestors migrating to crypto fundraising platforms after being kicked off competing fiat fundraising platforms.

The province of Ontario declared a state of emergency on Feb. 11 due to the protestor’s road blockades resulting in its government freezing millions in donations to protestors, at the time protestors raised around 21 Bitcoin (BTC), worth $902,000.

Prime Minister Justin Trudeau invoked the Emergencies Act on Feb.14 for the first time in Canada’s history giving him the power to freeze protesters’ bank accounts and monitor “large and suspicious transactions,” including crypto.

Two days later Canada's federal police force sent letters to several crypto exchanges demanding they stop processing transactions of more than 30 specific crypto wallet addresses linked to the ongoing protests.

Quebec’s energy manager to seek government approval to stop powering crypto miners

November 3, 2022 Coin Telegraph

Business

Energy provider Hydro-Québec cited the high energy demands anticipated in the Canadian winter in its reasons to reallocate 270 megawatts from crypto mining firms.

Hydro-Québec, the firm managing electricity across the Canadian province of Quebec, plans to reallocate energy supplied to crypto mining firms.

According to a Nov. 3 tweet from Canadian lawmaker Pierre Fitzgibbon, the government will request a decree from the energy board to release the company from its obligation to power crypto miners in the province. Hydro-Québec allocated 270 megawatts toward the mining firms, but electricity demand in Québec is expected to grow to a point that powering crypto will put pressure on the energy supplier.

The report Hydro-Québec filed with the government’s energy board on Nov. 1 said temporarily reducing the power provided to mining firms could help prevent threats to the “reliability and security” of energy for Québec residents. The distributor reported it took into account the demand for electricity from green hydrogen, cryptocurrencies and greenhouse farming.

“The additional energy needs in winter are high, and this, without the addition of the load related to the balance of the block reserved for cryptographic use applied to blockchains,” said Hydro-Québec. “There are anticipated energy purchases of nearly 3 [Terawatt-hour, or TWh] in winter from 2025 and even exceeding 3 TWh in 2027.”

Il en est question dans notre plan d'approvisionnement 2022-2032 déposé à la Régie de l'énergie. Nous avons demandé la suspension de l’attribution d’électricité au secteur des chaînes de blocs https://t.co/cZWgsvQk0V https://t.co/ZVsCiX95qf
— Hydro-Québec (@hydroquebec) November 3, 2022

As part of the energy manager’s plan for 2023 to 2032, crypto firms were expected to grow by 0.7 TWh, reaching a maximum power demand in 2028. Crypto miners in Québec have been the subject of additional tariffs since March 2021, and also gave the province options to scale their operations so as to reduce the load on the power grid.

Energy consumption is one of many factors crypto mining firms weigh when setting up shop, which has contributed to more than one U.S. state consider tax breaks for companies. Crypto adoption also seems to be growing across Canada, according to the Ontario Securities Commission. OSC CEO Grant Vingoe said in October that “more than 30% of Canadians plan to buy crypto assets in the next year.”

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Step 1: Set up an account on a crypto trading platform

Step 2: Add funds to your account

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Step 3: Deposit cash and buy cryptocurrency

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