The ballad of Binance and Ontario

I present to you the most exciting story in provincial securities regulation this month. That’s not a high bar, but it may still be worth reading.

Once upon a time, Binance announced that they would no longer do business with customers in the Canadian province of Ontario (Canada’s largest province, with by far the largest finance industry.). Why, WHY asked the poor crypto fans!

Apparently the Ontario Securities Commission (OSC) doesn’t like the idea of sketchy companies selling securities to Ontarians without any kind of regulatory permission. Who could have known? Not Binance, obviously.

So there was of course great wailing and gnashing of teeth, but mostly people accepted the fact and moved their assets away from Binance (until this week, when the procrastinators started asking how to do it.). Story over.

But not! A few days ago Binance announced (or CZ tweeted, same diff) that they had registered as a money service bureau with FINTRAC (Canada’s financial intelligence agency, comparable to FINCEN in the United States.). Oookay, so they’re no longer violating the Proceeds of Crime, Money Laundering, and Terrorist Financing Act by failing to register. Nothing to do with permission to sell securities but it never hurts to stop breaking laws.

But it did mean more! By registering with Fintrac, Binance announced , they could keep operating in Ontario, much like you’re allowed to drive so long as you’re in the process of getting a learner’s permit. Surely you must be able to. (FYI, check out the Yahoo Finance article. They typos are spectacular.). Here was part of the e-mail they sent out to customers:

However, as a result of ongoing and positive cooperation with Canadian regulators, Binance in Canada has been successful in taking its first steps on the regulatory path by registering in Canada as a Money Services Business with FINTRAC.

This registration allows us to continue our operations in Canada and resume business in Ontario while we pursue full registration.

As a result of ongoing and positive cooperation with Canadian regulators, there is no need for Ontario users to close their accounts by December 31,2021. Please check the following official announcement later for more details.

Everyone waited with baited breath! No, just kidding, they took Binance at face value and didn’t worry about the “official announcement later.” Finally, the OSC released a comment. A vigorouscomment, in fact:

Binance represented to OSC Staff that no new transactions involving Ontario residents would occur after December 31, 2021. Binance has issued a notice to users, without any notification to the OSC, rescinding this commitment. This is unacceptable.

No entity in the Binance group of companies holds any form of securities registration in Ontario.

So what next? Does Binance climb down in the next 24 hours? Does the OSC have to figure out how to hit Binance with a regulatory stick? Or will something even weirder happen? We’ll just have to see.