Binance, the world’s largest cryptocurrency-trading platform by volume, has registered three new corporate entities in Calgary and hired two senior employees with experience working for Canadian securities regulators as it seeks to comply with the country’s rules.

Lawrence Truong, former chief compliance officer of Toronto-based cryptocurrency-trading platform Coinsquare and a former regulatory analyst at the Alberta Securities Commission (ASC), is Binance’s new vice-president and general manager of Canada. Darren Gross, now Binance’s compliance director based in Calgary, has worked as enforcement counsel at the ASC as well as at the Investment Industry Regulatory Organization of Canada (IIROC). 

Steve Milton, Binance’s global vice-president of corporate communications, confirmed the new hires, but declined a request for an interview about the company’s Canadian strategy. “It’s just too early to discuss our plans moving forward,” he told The Logic in an email.

The hires and corporate registrations shed further light on the massive cryptocurrency-trading platform’s plans for Canada, following a dramatic series of events over the holidays.

In March, Canadian securities regulators announced a crackdown on the sector, with the Ontario Securities Commission giving platforms three weeks to start the compliance process or face enforcement action. Binance—whose chief executive, Changpeng Zhao, refuses to say where it is headquartered—announced last June it would stop doing business in Ontario, asking all users based in the province to close out their positions by Dec. 31, 2021. Other large foreign platforms followed, with most of the best-known now placing restrictions on Canadian-based users.

As the Dec. 31 deadline approached, however, Binance made some moves signalling an intent to stay in the Canadian market and work with regulators after all. Using a Calgary address, Binance incorporated Binance Canada Ltd., Binance Canada Holdings Ltd. and Binance Canada Capital Markets Inc. on Dec. 1—listing Truong and Gross as directors—and registered as a money-services business with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) on Dec. 24. The company also has seven active job postings in Canada, including one for a junior regulatory analyst and another in fraud and risk operations.

In an email sent to Ontario users on Dec. 29, Binance said the FINTRAC registration “allows us to continue our operations in Canada and resume business in Ontario while we pursue full registration,” saying users in the province no longer needed to close out their accounts. A FINTRAC money-services business licence, however, does not authorize cryptocurrency-trading platforms to sell securities—something all platforms that hold digital assets in custody for clients are doing, according to Canadian regulators, and something for which Binance in particular is known. The exchange offers a dizzying array of tokens, including some that offer leverage and other financial attributes.

The following day, the OSC issued a strongly worded rebuke. In a press release with the headline “Binance is not registered in Ontario,” the regulator said Binance sent the email to Ontario users without notifying it, calling the communication “unacceptable.”

On Jan. 1, Binance sent another email to Ontario users, clarifying that while it was true that residents of the province no longer needed to close out their accounts, the platform had restricted trading access and new user signups. “We are working hard to meet regulatory expectations and there are several steps we have to take before this can happen,” the email says.

Matthew Burgoyne, head of the cryptocurrency and blockchain group at McLeod Law in Calgary, said registration as a money-services business with FINTRAC is “not a free pass to conduct business in Canada.”

“That’s only part of the story,” he said. “The more onerous, of course, is complying with the securities regulations.”

By incorporating in Alberta, Binance has two options, Burgoyne said—seeking full registration as a securities dealer directly through IIROC, or going through the ASC for permission to operate as a restricted dealer first while it seeks full registration. Had it incorporated in Ontario, Binance would have had to deal with the OSC as its principal contact for registration.

“Maybe there’s a perception that Alberta might be a more receptive province to be regulated by versus Ontario,” Burgoyne said.

If Alberta is a friendlier jurisdiction for cryptocurrency-trading platforms, it hasn’t been reflected in registrations with financial regulators. To date, Vancouver-based Netcoins is the only cryptocurrency-trading platform outside Ontario to receive approval to operate from securities regulators.

While regulators have yet to approve an Alberta-based crypto platform, ASC spokesperson Theresa Schroder noted the regulator has approved the same six Ontario and B.C.-based platforms as its counterparts in other Canadian jurisdictions. She said “a number” of Alberta-based platforms are seeking registration.

Schroder declined to say whether Binance is among them and also declined to comment on Binance’s back-and-forth with the OSC in late December and early January. IIROC was unable to respond by deadline.

Eric Richmond, CEO of the Calgary-based cryptocurrency custodian Tetra Trust, said the fact that no Alberta-based cryptocurrency-trading platforms have achieved regulatory approval to date may simply be because there aren’t very many of them. He said he’s found the province’s elected officials to be helpful and welcoming.

“As a jurisdiction looking to diversify away from oil and gas, they have been very tech-focused, especially the City of Calgary,” Richmond said. “I think there is a natural nexus there for crypto companies to establish.”

Binance joins competitor Coinbase in incorporating in Canada and seeking to work with regulators rather than exit the market. Coinbase incorporated “Coinbase Canada, Inc.,” in B.C. in December 2020, and has also registered the company in Alberta and Ontario, with spokesperson Jaclyn Sales telling The Logic in November 2021 that it was working with securities regulators in the country. 

Binance registering in Canada would mean more competition for domestic cryptocurrency-trading platforms, which have benefited from foreign firms leaving the country. Michael Arbus, CEO of the Toronto-based cryptocurrency marketplace Bitbuy, pointed out the hurdles to registration for such a large platform would be high, including insurance for the balances of its online crypto wallets and accountability for the huge range of tokens that Binance offers.

“For a platform to make those necessary adjustments to address the Canadian users might be quite a technical lift,” he said.