Binance has ceased operations in Ontario after the Ontario Securities Commission (OSC) accused three other crypto exchanges of failure to comply with Ontario’s Securities Act. Rather than comply or have actions filed against them, Binance has decided to stop operating in Ontario altogether. The exchange has blocked services to Ontario and has urged its users to “close active positions” by December 31, 2021.
The OSC has alleged that Bybit, Poloniex, and KuCoin have failed to comply with Ontario regulations. Bybit allows users to trades futures contracts, which the OSC says are securities and derivatives. In the statement of allegations against Bybit, the OSC says “Bybit only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives.” The OSC alleges that Bybit failed to comply with registration requirements that apply to those who facilitate the trading of securities and derivatives. In the statement, the OSC goes on to say that any crypto exchange disregarding securities law will face regulatory action.
For Binance users being forced to close their accounts, there could be tax implications. Selling crypto for fiat and trading from one crypto to another constitutes a taxable transaction. Users may have to pay income tax or capital gains tax. For Binance users in Ontario, it’s important to export all of your trade details by the December deadline so that you can accurately complete your taxes next year.
We recommend to Ontario Binance users that you move your funds to another crypto exchange for Canadians as soon as possible. It’s also good practice for anybody who purchases crypto to ensure you keep records of your transactions for tax purposes.
It’s unclear at this point if Binance will halt operations in other provinces, or if the OSC will take action against any more exchanges. Cryptocurrency regulations are still being ironed out, so it’s important to be aware that things can change quickly, just as we’ve seen with Binance.