3 - 5 minute read
Paxos, a blockchain-based financial services firm, is set to exit the Canadian market on June 2, 2023. The news comes after Canada recently announced stricter requirements for crypto exchanges operating in the country, with a March 24 deadline for entities to commit to them. While some exchanges like Coinbase and Gemini have decided to continue their operations in Canada, Paxos, along with others such as OKX and dYdX, have decided to depart from the Canadian market.
In an official statement, Paxos did not mention regulatory pressure as the reason for its withdrawal. However, the firm’s announcement comes after recent regulatory scrutiny faced by crypto exchanges in Canada. Paxos is known for its crypto brokerage and stablecoin issuance businesses.
Any Paxos accounts without funds will be shuttered automatically on May 9, while all other accounts will be disabled on June 2. According to the company’s website, Canadian customers will still be able to transfer their digital assets to other wallets until June 2. A user on Reddit noted that this announcement affects Canadians who hold PAXG, a gold-backed cryptocurrency. Since Paxos lacks bank licensing in Canada, the customer will have to withdraw the assets to their personal wallet before June 2.
Regulations have become stringent in many countries, including Canada. In this context, Paxos’ exit from the Canadian market seems a wise decision, given the uncertain future of the crypto market. An official spokesperson from Paxos advised that the company remains committed to serving clients worldwide and that users residing outside Canada should not be directly affected by this change. However, this withdrawal could lead to various implications in the future.
Following last week’s Avalanche Evergreen announcement, today marks the launch of the Spruce Subnet!— Avalanche 🔺 (@Avax) April 12, 2023
Institutional partners including @TRowePrice, @WisdomTreeFunds, @Wellington_Mgmt & @CumberlandSays will use Spruce to test public blockchain applications. https://t.co/1KLzxcUCSB pic.twitter.com/xvaUmKO3BV
According to Lou Kerner, Partner at CryptoOracle, “this definitely is not great news for the crypto industry in Canada. The stricter regulations have put off many major players. Paxos, being a well-established firm, leaving the market does not bode well for the industry. When institutions leave a market, it makes it harder for new players to enter or even stay.”
The Bottom Line
Paxos’ withdrawal from the Canadian market should not come as a surprise, given the heightened regulatory scrutiny on crypto exchanges in the country. This announcement could have implications for the future of the crypto market, especially in Canada. As regulatory pressure increases in many countries worldwide, traders are advised to remain cautious and evaluate the risks before investing. The ongoing uncertainty surrounding the crypto market might lead to many more such announcements in the future, making it essential to stay updated with the latest market developments.