Crypto.com has announced that it will no longer facilitate transactions that feature USDT as it looks to comply with the latest regulations issued by the Ontario Securities Commission (OSC).
The move to delist USDT comes after Canadian authorities outlined their commitment to more robust oversight of exchanges following the collapse of FTX.
Crypto.com To Delist USDT
One of the world’s biggest exchanges by trading volume, Crypto.com, has announced that it would be delisting Tether’s USDT stablecoin for users in Canada. The move means the exchange will no longer facilitate transactions using USDT in Canada and its associated regions. Crypto.com stated that it made the decision to comply with instructions from the Ontario Securities Commission (OSC) as part of its pre-registration undertaking of a restricted dealer license.
“Crypto.com has delisted USDT for users in Canada in accordance with instructions from the Ontario Securities Commission (OSC) as part of our pre-registration undertaking for a restricted dealer license.”
The exchange also told its customers that if they failed to withdraw or convert their USDT by the deadline, their USDT stablecoins would be converted to USDC. Canadian users of Crypto.com were notified of the new policy via email, even as images of the notice began circulating on Twitter and Reddit.
“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.”
Complying With The OSC
Crypto.com announced back in October that the Ontario Securities Commission had accepted its pre-registration undertaking to operate in Canada. However, to comply with regulatory requirements, exchanges operating in the province of Ontario cannot deal with assets banned by the regulatory authority. This list also includes USDT. Coinsquare, an exchange regulated by the Investment Industry Regulatory Organization of Canada (IIROC), presently does not list USDT as one of its assets.
Crypto.com’s move comes as regulators worldwide have increased scrutiny of cryptocurrency exchanges following the unraveling of FTX and amidst growing competition among top stablecoins. Canada’s top securities regulatory body, the Canadian Securities Administrators (CSA), issued a statement last month, stating it would be strengthening its oversight of cryptocurrency exchanges by expanding the existing requirements for platforms operating in the country. In a press release, the CSA stated that it is actively monitoring and assessing the role of stablecoins in Canadian markets. The CSA is comprised of regulators from ten provinces and three territories.
Tether’s Controversial Collateralization
According to Tether’s website, the assets backing the USDT stablecoin are comprised of cash and cash equivalents, such as treasury bills. However, Tether has come under fire due to the contents and quality of reserves backing the USDT stablecoin. In a ruling by a US district judge for the Southern District of New York, Katherine Polk Failla, the company was ordered to produce financial documents related to the backing of the USDT stablecoin.
The order was passed thanks to a lawsuit filed by several crypto traders against Tether, alleging that the company had propped up the price of Bitcoin through trades consisting of unbacked Tether tokens. Tether has also fought against allegations that its reserves are primarily comprised of commercial paper from Chinese and Asian companies, calling them baseless and false. However, just months later, the company announced that it had eliminated all its commercial paper holdings and replaced them with US Treasury Bills.
In 2021, Bitfinex, an exchange owned by Tether’s parent company, and Tether were ordered to shut down in New York and pay a fine of $18.5 million for making false and misleading statements related to Tether’s backing. Letitia James, New York Attorney General, stated at the time,
“These companies obscured the true risk investors faced and were operated by unlicensed and unregulated individuals and entities dealing in the darkest corners of the financial system. Tether’s claims that its virtual currency was fully backed by US dollars at all times was a lie.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.