Coinbase is operating two entities in Canada as per a new report. The first firm is Coinbase Canada which has an international trading services provider license. The second platform is Coinbase which has a restricted dealer license.
The US-based trading platform secured a restricted license in Canada while doubling down on international expansion in the pretext of ongoing regulatory scrutiny in the United States.
Coinbase confirmed the acquisition of a new trading license in Canada operating as a registered entity in Ontario. The license was issued by the Canadian Securities Administrators (CSA) as per an official announcement on 3rd April 2024. The regulatory agency has authorized the firm as a regulated trading platform in Canada.
The firm noticed in a recent announcement that the registration was a result of months of preparation that started from 2023 March. As part of the licensing efforts, Coinbase signed an Enhanced Pre-Registration Undertaking to comply with regulatory requirements and maintain operational quality.
CSA national registration data has listed both Coinbase entities as Coinbase Incorporated a restricted dealer and Coinbase Canada as an international dealer.
Features of Restricted Dealers
CSA notes that restricted dealers are used for firms that do not fit to any other category. The regulatory agency is working on establishing individual requirements for various firms that have this status.
Meanwhile, international dealers cannot offer trading services to local investors in terms of equity or debt securities with the exclusion of government issued as per JD Supra. The newly licensed firm in Canada is just one part of Coinbase’s international expansion.
Coinbase launched the first platform in August last year and expanded to Canada after partnering with Peoples Trust Company. In April, Coinbase founded a tech hub in Canada operating with 200 full-time employees as per a recent announcement.
Platforms such as Kraken have applied for license in the location. Kraken filed for pre-registration in 2023 with the Ontario Securities Commission for a restricted dealer.
CSA revised regulations for crypto firms in 2023. These revised regulations will require local crypto firms to comply with more stringent custodial standards such as leverage restrictions and stablecoin trading approval before opening it for investors.
At the time, the crypto sector is looking at some major changes as the final Bitcoin Halving approaches nearer. The impact on Bitcoin miners operating in Canada is also sizeable.
Hut 8 Shuts Down Bitcoin Mining Due to Surging Costs
Hut 8 one of the major Bitcoin mining firms recently reported closing down various mining sites as per a new Cointelegraph article. The platform reportedly deactivated Drumheller and Alberta sites that produced 48 Bitcoins per year.
The mining firm confirmed the closure in a public announcement on 6th March 2024. Hut 8 stocks fell by 23% within 24 hours on 19th July after short-selling allegation regarding its partner firm USBTC brewed legal trouble in a $725 million merger.
The Drumheller facility accounted for 1.4% of the total Bitcoin mined by Hut 8 and generated 11% of the total hash rate. The officials noted that the decision to shut down Drumheller site was finalized after conducting a comprehensive analysis.
CEO Asher Genoot noted that all Bitcoin miners of the firm will relocate to the Alberta, Canada facility with immediate effect. He further stated that Hut 8 is going to maintain a lease for sites and option to re-energize a site as and when market conditions improve.
Mining Difficulty and Rising Energy Costs
The firm attributed the latest structural changes to rising energy costs and mounting mining difficulty. The firm also stated Bitcoin halving that is set to reduce rewards by 50% resulting in stagnation. Energyrates.ca statistics indicated that per kilowatt hour cost has increased by 1000% in Alberta since 2017.
Meanwhile, the provincial government has also imposed restrictions on new mining projects citing concerns around power usage. Hut 8 officials have retained that the reports regarding the merger with USBTC are filled with speculative claims and unfounded character attacks that led to Jamie Leverton resigning as CEO on 8th February.
