Cryptocurrency exchange Coinbase has announced its decision to suspend trading in three prominent stablecoins in Canada. Among them is Tether (USDT), which is the strongest competitor to the Coinbase-backed USDC.
Stablecoins fail to meet standards
A message sent in the form of an email to customers informed that Tether (USDT), RAI and DAI no longer meet the company’s listing standards. Nevertheless, the platform’s management is reassuring:
“The suspension of trading will not affect customers’ access to RAI, DAI or USDT wallets, which will remain available for deposit and withdrawal functions after the suspension of trading.” The implementation of the trading suspension will take place on August 31, around 12:00 pm Eastern time.
Recall that a month earlier, the Canadian Securities Administrators (CSA) had designated stablecoins such as Tether or Wrapped Bitcoin (WBTC) as securities. As a result, cryptocurrency exchanges cannot allow Canadian customers to trade or have exposure to crypto assets that are considered securities or derivatives.
Coinbase’s decision indicates that the exchange may be subject to similar pressure that has affected other platforms that have decided to withdraw support for Tether in the Canadian market. However, it is worth noting that other stablecoins available on the platform, such as USDC, will remain available to local traders.
The essence of stablecoins
Stablecoins are a type of cryptocurrency with a fixed value, usually pegged to traditional assets such as US dollars, and are designed to maintain a fixed exchange rate. They are an important part of the cryptocurrency ecosystem, enabling the use of digital equivalents to traditional currencies in regions where dollar availability is limited. In addition, DeFi (decentralized finance) traders use stablecoins to trade on decentralized exchanges.
Tether, which has a market capitalization of more than $82 billion, is undoubtedly the most popular stablecoin. Its trading volumes exceed those quoted by Bitcoin. Nonetheless, it is controversial due to doubts about the full security of its reserves and the lack of a full audit.
Coinbase struggles to compete for Canada
Recently, Coinbase announced the introduction of comprehensive services for Canadian users, including support for instant electronic payments. This is an important step for the company, which had previously limited its offerings in this market.
Nana Murugesan, Coinbase’s vice president for international business development, stressed that Canada stands out for its friendly approach to regulation, focusing on engagement instead of imposing restrictions.
In contrast to Coinbase, Binance, the world’s largest cryptocurrency exchange, announced its withdrawal from the Canadian market in June, arguing for new stablecoin guidelines and investor restrictions.