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Coinbase today announced that it will suspend trading for three popular stablecoins in Canada, shortly after boasting of its full entry into the Canadian market—including trading of the biggest stablecoin in the world, Tether.
In an email to customers on Monday, the company said that Tether (USDT), RAI, and DAI do not meet the company’s listing standards, based on its most recent reviews.
“The trading suspension will not affect customers’ access to RAI, DAI, or USDT wallets which will remain available for deposit and withdrawal functionality after the trading suspension,” Coinbase confirmed to Decrypt via email. The suspension will take effect on August 31 at around 12 p.m. ET.
Though the company did not go into detail, its action mirrors that of rival exchange Crypto.com, which canceled Canadian USDT support in January in response to instructions from the Ontario Securities Commission (OSC).
At the time, the agency stressed that crypto exchanges are “prohibited from permitting Canadian clients to trade, or obtain exposure to, any crypto asset that is itself a security and/or a derivative.”
It appears that Coinbase may be bucking to the same pressure in its decision to remove support for Tether on its platform in the Canadian market. However, it’s worth noting that the company’s own stablecoin and the second largest such asset in the market, USDC, will continue to be made available to Canadian traders on Coinbase.
Stablecoins are crypto tokens that are typically pegged to real-world assets, such as U.S. dollars, and are designed to maintain a steady price. These assets are an integral part of the crypto market and serve as dollar equivalents in parts of the world where U.S. dollars are either unavailable or restricted. They are also used by DeFi traders to enter and exist positions on decentralized exchanges.
Tether is the most popular of these assets, with a market cap of over $82 billion. It is far and away the most heavily traded asset in the crypto space, even more so than Bitcoin. But the stablecoin has a controversial history. Critics have for years questioned whether the stablecoin is indeed fully backed by reserves, and the company has yet to provide a full audit of those reserves.
Earlier this week, Coinbase announced the roll out of its full suite of services to Canadian users, including support for Canada’s instant electronic payments service, after previously only offering limited trading services.
Coinbase’s VP of international business development, Nana Murugesan, told Decrypt that Canada is more welcoming than the United States because it uses “regulation by engagement” rather than “regulation by enforcement.”
At present, Coinbase is battling a lawsuit from the U.S. Securities and Exchange Commission (SEC) alleging that it has listed multiple securities on its platform, though Coinbase doesn’t agree with the agency’s interpretation of the law.
In contrast to Coinbase, Binance, the world’s largest crypto exchange by volume, announced in June that it was leaving the Canadian market due to “new guidance related to stablecoins and investor limits.”