Canada’s Security Regulator Prohibits Regulated Crypto Exchanges from Trading in Tether (USDT)
The Ontario Securities Commission (OSC) has put the dominant stablecoin Tether (USDT) in its prohibited crypto assets list while allowing cryptocurrency exchanges to trade in Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).
This was disclosed in the regulatory documents regarding the exemptive relief applications in multiple jurisdictions for crypto exchange Coinberry Limited – “the first pure-play crypto trading platform in Canada to be fully registered” and Wealthsimple.
These two Toronto-based cryptocurrency exchanges are the only crypto asset dealers to receive regulatory approval by the OSC to operate their platforms in all Canadian provinces and territories for two years. Evan Thomas, Head of Legal at Wealthsimple Crypto, told a local publication in a statement,
“Canadians are still waiting to see the impact of regulatory standards being consistently applied across the industry. We hope regulators will ensure other platforms bring themselves into compliance with Canadian securities laws very soon.”
Both the companies’ documents put Tether in the “Appendix C – Prohibited Crypto Assets” section. It further noted that the application filer,
“Will not trade Crypto Contracts based on crypto assets, digital or virtual currencies, and digital or virtual tokens listed in Appendix C to this Decision.”
While not allowing trading in USDT, the documents do not specify the reason behind the decision. But it does put the disclaimer that OSC’s “decision should not be viewed as precedent for other filers.”
Tether, which has a market cap of $65.7 billion, settled its lawsuit with the New York Attorney General earlier this year for $18.5 million and is required to release quarterly transparency reports. As per the settlement, the stablecoin operator is also barred from doing business in New York.
In its latest transparency report, Tether said USDT is fully backed with 75.85% of it backed by Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper.
Late last month also came the report that the US DOJ is probing the largest stablecoin and its executives for bank fraud. Tether, however, said that it “routinely has an open dialogue with law enforcement agencies…as part of our commitment to cooperation, transparency, and accountability.”
But it looks like Canada's securities regulator is not yet comfortable with Tether’s situation and may even perceive it as high-risk.