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End of service in Canada due to regulatory environment
Crypto asset (virtual currency) derivatives decentralized exchange dYdX announced on the 7th that it will stop providing services in Canada.
New user registration has been suspended since the 7th, and existing users can continue trading on the dYdX platform for a week, but after the 14th, they will only be able to close their positions. Looking good.
The withdrawal function will be maintained even after that. It is suggested that there was a change in the regulatory environment behind the termination of the service provision. dYdX said:
As always, dYdX will maintain transparency around product decisions and democratize access to financial opportunities.
We hope that over time the Canadian regulatory environment will change and we will be able to offer our services in Canada.
What is a decentralized exchange
A decentralized exchange built on blockchain. It is also called “DEX” from “Decentralized EXchange”, which is an English translation of “decentralized exchange”. Since transactions are conducted directly between parties without going through a central administrator, there is no need to pay a fee to the administrator, and other features include low liquidity and the user managing the private key.
Cryptocurrency Glossary
Canadian Authorities Tightening Crypto Regulations
The Canadian Securities Administration (CSA) is tightening regulations following a string of defaults in the cryptocurrency market in 2022.
In February, we notified CSA staff of changes in regulatory practices. In particular, trading through cryptocurrency trading platforms based outside of Canada and not registered as a business in Canada poses a risk to Canadian investors.
On top of that, unregistered platforms will be required to do the following:
- Strengthen rules for virtual currency custody and separate management of customer assets
- Prohibits offering margin, credit or other forms of leveraged trading uniformly to all customers
- Strengthen rules for submitting financial information to regulators on a regular basis
It also bans cryptocurrency trading platforms from offering Canadian users contracts to buy or sell cryptocurrencies that are “securities or derivatives.” dYdX, which offers derivatives trading, appears to have been particularly affected by this.
As of December last year, the Canadian Securities Administration (CSA) is still demanding that cryptocurrency trading platforms ban margin and leveraged trading and segregate customer assets.
Cryptocurrency trading is high risk, primarily citing uncertain compliance by exchanges, interconnectedness within the sector, bankruptcy, hacking, price volatility and other risk factors.
connection: Canada to ban cryptocurrency margin trading
Australian authorities also concerned about derivatives
Regarding derivatives trading, Australian authorities are also concerned about the risks of retail customers trading cryptocurrency derivatives. Binance’s Australian entity has decided to close its derivatives division after consultations with authorities.
connectionAustralian regulators revoke derivatives sector license at Binance’s request
What are derivatives
Financial products derived from underlying assets such as virtual currencies and stocks. The English notation is “derivative” which means “derived”. Also called “financial derivatives” in Japanese. Representative derivatives include futures trading, option trading, and swap trading. They are used to reduce the risk in trading the underlying asset or simply to pursue higher profitability.
Cryptocurrency Glossary
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