Crypto Impact: Bank of Canada Discusses Digital Dollar as Binance Departs
Binance, the world’s largest crypto exchange, has pulled out of Canada due to new regulations put in place by the Canadian Securities Administrators. The Bank of Canada is also investigating whether to create a purely digital version of the Canadian dollar, citing the potential risk that foreign digital currencies could pose to the country’s financial system. Canada’s strict regulatory stance on cryptocurrency has resulted in clashes with foreign crypto platforms, including Binance and FTX Inc. Binance stated that it disagreed with new rules that placed limits on investors using crypto exchanges and around stablecoins. Although Binance has not ruled out a return, it would only come back if and when Canadian users have more freedom to access a broader suite of digital assets. Regulators have authorized eleven cryptocurrency trading platforms in Canada, with Coinbase and Kraken also understood to be working with Canadian authorities to secure authorization to do business in the country. The Bank of Canada has been studying digital currencies since 2013 and is seeking feedback on whether to adopt a digital dollar to keep up with digital innovations and ensure fiat currencies are not squeezed out of future economies. The bank has warned that a rise in foreign digital currencies could compromise the role of the Canadian dollar and pose a risk to the country’s financial system.