Decentralized digital currency exchange dYdX becomes the latest exchange to exit Canadian markets over tighter regulatory controls.
The exchange announced via a blog post that new users will not be onboarded into the platform. A seven-day window was provided for users to make trades before the platform moves all accounts into “close-only mode.”
Under the close-only mode, users will only be allowed to make withdrawals from their accounts. dYdX expressed their regret for the inconvenience that the new restrictions will bring to customers. The decision to leave Canada comes on the heels of the Canadian Securities Administrators (CSA) issuing new rules for service providers in the country with a keen focus on separating assets and transparency.
Under the rules, digital currency exchanges are precluded from allowing Canadian clients to enter agreements to trade assets that are either derivatives or securities. Despite the provision of a clause by the CSA to allow certain exemptions to the rule, the decision sparked a wave of discontent among virtual currency service providers.
“As always, dYdX is committed to providing transparency around product decisions and democratizing access to financial opportunity. We hope that the regulatory climate in Canada will change over time to allow us to resume services in the country,” the blog post read.
Although operating as a decentralized entity, dYdX has made several attempts to play by the regulatory rulebook. In August 2022, the exchange announced a new identity verification process that saw the firm offer customers $25 in exchange for webcam verification.
The move was widely criticized by stakeholders noting the exchange was simply bribing customers to use their faces for promotional purposes. Others took swipes at dYdX for violating the privacy rights of their users, leading to the exchange ditching the plans in its entirety.
“No matter the cause, this is an absolutely horrible idea and you should walk this back immediately,” Adam Cochran, partner at Cinneamhain Ventures, said.
More exchanges threaten to pull out
As Canadian regulators tighten the screws for the industry, several digital currency exchanges have hinted at their eventual departure from the country. Blockchain.com and Deribit are widely touted to halt their services, while Crypto.com and Coinbase (NASDAQ: COIN) have confirmed their ambitions to remain, saying it is a key arm in their international roadmap.
OKX has announced its departure from the country, with all winding up operations scheduled for June 22. The exchange cited unfavorable regulatory conditions as the main reason for its exit but added that the departure is merely “temporary and we are working with regulators to solve this issue.”
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