According to user reports circulating on social media on Jan. 10, cryptocurrency exchange Crypto.com plans to delist Tether (USDT) for Canadian users, effective Jan 31. The exchange has told itcustomers that if they do not withdraw or convert their USDT assets by the deadline, then their Tether will be automatically converted into USD Coin (USDC). It wrote:
“You may incur a retrieval fee if deposits of USDT are made from external wallets after this suspension period, and fund retrieval may not be possible in some cases.”
In August, Crypto.com announced that the Ontario Securities Commission had accepted the firm's pre-registration undertaking for operations in Canada. As part of regulatory requirements, cryptocurrency exchanges operating in the Canadian province of Ontario are prohibited from listing digital assets banned by the OSC, which includes USDT. Similarly, Coinsquare, a cryptocurrency exchange regulated by the Investment Industry Regulatory Organization of Canada (IIROC), currently does not list USDT as one of its available trading assets.
In issuing its decision, the OSC never explained the rationale behind its Tether ban. However, a document unsealed on Feb 17, 2021, stated that "the only U.S. dollars held by Tether ostensibly backing the approximately 442 million tethers in circulation was the approximately $61 million on deposit at the Bank of Montreal." Meanwhile, experts have from time to time questioned the authenticity of Tether’s reserves and its audits.
Currently, all prospective cryptocurrency exchanges must register with the IIROC if they want to operate in Canada. Exchanges such as Binance, Bybit and Huobi have faced issues with the OSC in the past regarding their regulatory status. In response to the development, a spokesperson from Tether commented:
"The Canadian Securities Administrators and their member securities commissions started issuing guidance in 2021 regarding requirements for regulated exchanges on the matter of stablecoin support, at that time particularly related to USDt. The topic just resurfaced as a result of Crypto.com needing to comply with Canadian regulatory requirements."
The spokesperson further explained that while Canada is "not a core market for Tether,", the firm will ensure its products can be used beyond any borders.
"With that being said, we can see how Canada is moving more aggressively on crypto regulations than most other countries. We believe that a more fair, open and forward looking approach to financial access should be encouraged."
Update Jan. 11, 2023 6:15 PM UTC: Included response from Tether to the story.