Cryptocurrency exchange Kraken is reaping the benefits of staying in Canada after rivals such as Binance and OKX said they plan to withdraw.
Kraken’s customer deposits in the country grew by 25% in the weeks following Binance’s announced departure in early May, and it saw a fivefold increase in downloads of its two mobile apps for Canadian clients within a week of OKX saying it planned to leave back in March. A Kraken representative shared the data with CoinDesk via email.
Canada tightened its regulatory framework for digital asset trading earlier this year, resulting in an exodus of some of the largest crypto exchanges. As well as Binance, the largest exchange by volume traded, and OKX, crypto firms Paxos, Blockchain.com and Deribit all announced their departures. The most recent leaver was Bybit, earlier this week.
Like Kraken, Nasdaq-listed exchange Coinbase (COIN) said it was happy to commit to Canada’s enhanced Pre-Registration Undertaking (PRU). When compared with the lack of clarity in the U.S., Coinbase went as far as saying it loved working with a regulator the firm could engage with.
Kraken has been in Canada for over 10 years, has more than 250 staff there and has been a money services business in the country since 2019, the firm’s managing director for Canada, Mark Greenberg, pointed out.
“I think the Canadian regulatory approach works for us,” Greenberg said in an interview with CoinDesk. “There are things we really liked about it; things we’ve been doing forever, like the focus on security on customer assets, for example. And then there are things we don’t like as much about it, such as some of the limits on trading and margin.”
One of the demanding new provisions for crypto exchanges set out by the Canadian Securities Administrators (CSA) earlier this year, is the requirement that firms hold a large proportion of client assets with a third-party custodian.
“We’ve all committed to using a third-party custodian as part of the commitments we’ve made, and I think we will continue to have that discussion with the regulators,” said Greenberg. “It’s one of those things where there are pros and cons, and I think the regulator is aware of the pros and cons and options around this. At the end of the day, what matters most for us is that our clients’ assets are safe and secure and not open for rug pulls or other types of things.”
