It is a story that still haunts the first generation of Canadian cryptocurrency users to this day. Four years earlier, Gerald Cotten, co-founder of Canada’s then-largest cryptocurrency exchange QuadrigaCX, died under mysterious circumstances in India. But before his death, Cotten took virtual keys from digital wallets and kept them cold, causing the permanent loss of $190 million in user funds.
The incident triggered a crisis of confidence in the country’s emerging cryptocurrency sector and made regulators deeply skeptical of blockchain technology. Although the old wounds end up healing. Fast-forwarding to today, Coinsquare has taken over to become one of the largest cryptocurrency exchanges in Canada, with $8 billion in cumulative trading volume since 2014.
In an interview with Cointelegraph Business Editor Sam Bourgi, Coinsquare CEO Eric Richmond explained that a regulatory framework is now in place to prevent similar incidents in the future:
“Unlike businesses south of the border, all cryptocurrency trading platforms here have to be registered with the Investment Industry Regulatory Organization of Canada (IIROC). There is a backlog in processing applications in this moment, while we had ours presented since November 2020, since we wanted to be one of the first regulated actors.”
Since the regulation has recently come into force, all cryptocurrency exchanges have a two-year exemption in which they must register with the IIROC in this period. Currently, Coinsquare is the only company in the sector that is registered with the IIROC. Similarly, the company has a strict set of rules when it comes to listing new tokens to ensure that its users do not fall victim to scams:
We put it through evaluating the underlying technology, the marketing, the team behind it, analyzing potential legal issues, irregular price movements, etc. We go through your in-depth analysis through different teams, such as compliance, commercial, legal and security. It’s about really understanding the token. And if it passes the tests, the listing threshold is set.
Canadian regulators have taken a tough stance on exchanges that allegedly do not comply with the new rules. In March, Binance ceased operations in the province of Ontario and admitted to the province’s securities commission (OSC) that it was not registered there. Similarly, the OSC took enforcement action against cryptocurrency exchanges Kucoin and Bybit, alleging a violation of securities laws.
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