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TMX buys 78% of ETF tool VettaFi for $848M, boosting stake to 100%

Toronto Stock Exchange owner TMX is finalizing the purchase of VettaFi, an ETF tool that lists blockchain and cryptocurrency-themed E3TFs, including the VanEck Digital Transformation ETF.

TMX Group, the operator of Canadian stock exchanges such as the Toronto Stock Exchange and the Montreal Exchange, is finalizing the acquisition of VettaFi, a significant player in the exchange-traded fund (ETF) industry, including in blockchain and crypto ETFs.

The firm officially announced on Dec. 13 that it has agreed to acquire the remaining 78% of the common units of VettaFi for $848 million that it didn’t already own. The new deal brings the total amount of the acquisition to $1.03 billion, which includes investments TMX Group made in VettaFi in the first half of 2023 for around 22% of the common units, the announcement notes.

“The acquisition of VettaFi will add a dynamic new component to our growing information business, with an exciting set of capabilities and a visionary, innovative team committed to client success,” TMX Group CEO John McKenzie noted. He added that TMX had previously worked with VettaFi, and their collaboration had brought a “powerful combination and a tremendous culture fit.”

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Crypto ownership in Canada slips in 2023, but average value of holdings rises

Only 34% of Canadians still believe that crypto “will play a key role in the future,” but the number of those able to give a basic definition of digital currencies has risen slightly.

The number of crypto hodlers in Canada dropped slightly in 2023, but the average value of their holdings rose significantly. However, 77% of respondents regret investing in crypto assets, according to a survey published by the Ontario Securities Commission (OSC).

The OSC published its “Crypto Assets Survey 2023” on Nov.

The survey results reflect a general pessimism toward crypto in the country’s population, which could be due to the period when the research was done.

Related: Digital Canadian dollar fails to impress despite high awareness

Fewer Canadians own crypto assets than a year ago, dropping from 13% in 2022 to 10% in 2023.

Despite the pessimism, 39% of respondents claimed their crypto portfolio is profitable, which is only slightly less than in 2022 (46%).

The most common reason for buying crypto remains consistent.

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Digital Canadian dollar fails to impress despite high awareness

People who were aware of CBDCs were more reluctant to adopt the technology when compared with those who didn’t know about it.

A recent public consultation on Canada’s central bank digital currency (CBDC) initiative revealed an overall negative sentiment from Canadians, confirming the Bank of Canada’s concerns around its country-wide adoption.

Through the “Digital Canadian Dollar Public Consultation Report,” the Canadian central bank intended to identify a place for CBDCs in a world dominated by digital fiat payments and credit cards. However, in a survey that amassed 89,423 responses, Canadians demanded regulations requiring merchants to accept cash as payment.

Awareness of a digital Canadian dollar. Source: bankofcanada.ca

The Bank of Canada’s report shows that nearly 95% of the respondents either heard or were familiar with the concept of a digital Canadian dollar.

Canadians demand regulation for cash acceptance if CBDCs were to be introduced. Source: bankofcanada.ca

Of the respondents, 93% primarily make paper cash payments daily but also use credit and debit cards and other modes of online payments.

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Gemini files for pre-registration undertaking in Canada

All crypto exchanges are required to sign such undertaking if they want to operate in Canada, following a February rule change.

On April 12, cryptocurrency exchange Gemini announced it filed a pre-registration undertaking with the Ontario Securities Commission, which oversees capital markets in Canada’s most populous province. The undertaking is a prerequisite to becoming a restricted dealer in Canada and is necessary for all cryptocurrency exchanges wishing to conduct business in the country. Cynthia Del Pozo Garcia, Gemini’s director of strategy and corporate development, wrote:

“As one of the most important and developed markets in the Americas, Canada has played an essential role in Gemini’s international expansion.“

According to Del Pozo Garcia, Gemini holds holds “many licenses globally,” such as state money transmitter licenses, an E-Money License from the Financial Conduct Authority in the United Kingdom, and an E-Money License from the Central Bank of Ireland. “Related to our licenses, Gemini must undergo annual audits of our financial statements and is subject to bank examinations conducted by the New York Department of Financial Services,” the director said.

On Feb. 22, the Canadian Securities Administrators (CSA) published a notice requiring all crypto asset trading platforms to sign a legally binding pre-registration undertaking to continue operating in the country. Among many restrictions, exchanges will be prohibited from allowing Canadian clients to buy or deposit stablecoins without prior approval from the CSA. The notice read, in part:

“In light of recent insolvencies involving a number of CTPs, including Voyager Digital, Celsius Network, the FTX group of companies, BlockFi and Genesis Global (collectively recent CTP insolvency events), we are introducing important new investor protection provisions into the standard form of PRU.“

Since the new regulations took effect, cryptocurrency exchange OKX has announced it would cease operations in Canada by June 2023. Meanwhile, fintech company Paxos said it would withdraw from Canada, citing regulatory uncertainty. Binance and Kraken have since stated that they filed the pre-registration undertaking required to continue operations in the country. 

Related: OKX to cease operations in Canada by June 22, 2023

Chainalysis and Calgary police launch cryptocurrency investigation center

Calgary’s police department has launched the Western Canada Cryptocurrency Investigations Centre in partnership with blockchain data firm Chainalysis.

A joint task force featuring investigators from the Calgary police department and analysis from blockchain data firm Chainalysis, dubbed the Western Canada Cryptocurrency Investigations Centre, was officially launched on April 12. 

In a blog post announcing the partnership, Chainalysis co-founder and chief strategy officer Jonathan Levin remarked that “this demonstration of public-private partnership to solve novel issues in financial services is a model that the rest of the world can learn from.”

The new center will expand on current efforts to address expanding cryptocurrency-related crime in Western Canada.

According to Chainalysis, Canada has seen a massive uptick in cryptocurrency adoption rates. Per the company’s blog post, “when we look at Canadian engagement with crypto ATMs, decentralized exchanges, and centralized exchanges, we see that Canada has experienced a nearly 213% increase since 2019 as of Jan 2023, with a peak level of adoption around 865% greater than March 2019 in May of 2021, driven largely by interest in DeFi.”

Related: Canada crypto regulation: Bitcoin ETFs, strict licensing and a digital dollar

This rapid growth, however, has been accompanied by an increase in crime. Chainalysis reports that more than $41 million in funds were lost to cryptocurrency scams in Canada in 2022 alone. It also notes that “for every 1,000 Canadians, there was at least $1,144 CAD in total exposure to illicit crypto activity” in the same period.

The Calgary police department plans to implement the private-sector expertise from Chainalysis to augment its investigator training programs and, per the blog post, to provide officers with “around-the-clock case support.”

The next steps, according to Chainalysis, involve expanding the program to serve more law enforcement agencies in Western Canada. The company intends to eventually “scale this concept globally, working with law enforcement personnel around the world to offer bespoke, customized offerings depending on the unique needs of the region at hand.”

Crypto Biz: Twitter’s DOGE bet, Canada’s new crypto conglomerate, UK banking news

This week’s Crypto Biz explores Canada’s new crypto conglomerate, the recent premature passing of the Cash App creator in San Francisco, as well as DOGE news, and U.K. crypto challenges.

Twitter CEO Elon Musk has made another marketing move to bridge the social media platform with the crypto community by switching its logo icon to the Shiba Inu dog — Dogecoin’s (DOGE) digital symbol. The move, however, seems to be more than just an engagement strategy. It comes just two days after Musk asked a judge to dismiss a $258 billion lawsuit alleging the operation of a pyramid scheme to promote Dogecoin. 

Whether intended or not, the new icon led to another surge in DOGE prices during the week.

A less optimistic reality faces crypto firms in the United Kingdom, where financial institutions are limiting the ability of crypto-related businesses to access banking services. The move goes in the opposite direction of Prime Minister Rishi Sunak’s plans to prioritize financial technology disruption and make the U.K. a global crypto hub.

This week’s Crypto Biz explores Canada’s new crypto conglomerate, the recent premature passing of the Cash App creator in San Francisco, as well as DOGE news, and U.K. crypto challenges.

Elon Musk changes Twitter icon to Doge after seeking lawsuit dismissal

Dogecoin fans — and investors — welcomed the new Twitter icon with the popular meme token. The social media platform updated its avatar on April 3, two days after its CEO Elon Musk asked a United States judge to dismiss a $258 billion lawsuit filed by investors alleging the operation of a pyramid scheme to promote Dogecoin. Multiple market studies in the past have suggested that Musk tweeting about DOGE tends to drive its price higher. Musk’s lawyers, however, argued that “funny pictures” and “tweeting words of support” do not amount to a fraud claim. In this week’s case, at least, the marketing move positively impacted the altcoin’s price, with the token surging by over 22% one hour after the icon change.

WonderFi merges with Coinsquare and CoinSmart to form regulated crypto asset platform

A new crypto conglomerate has emerged in Canada as WonderFi Technologies, Coinsquare, and CoinSmart Financial have announced their merger to become the country’s largest regulated crypto trading platform, with over 1.65 million registered users. The newly merged company promises to offer Canadians a wide range of diversified products and services, including retail and institutional crypto trading, staking products, business-to-business crypto payment processing, sports betting and gaming. The companies “transacted over $17 billion since 2017 and have over $600 million in assets under custody.” The new company is estimated to have approximately $50 million in cash and investments and no outstanding debt.

United Kingdom banks are turning away crypto clients

Crypto companies are facing difficulties accessing banking services in the United Kingdom. The few banks still working with crypto firms are requesting more documentation and information about how they monitor clients’ transactions. Challenges include having applications rejected, accounts frozen and overwhelming paperwork. Crypto companies are turning to payment service providers such as BCB Payments and Stripe to maintain business operations in the United Kingdom. Just a few weeks ago, HSBC Holdings and Nationwide Building Society banned cryptocurrency purchases via credit cards for retail customers in the country, joining a growing list of banks in the U.K. to tighten restrictions on digital assets. 

Cash App creator dies following stabbing in San Francisco

Tragic news came from San Francisco as Bob Lee, the former chief technology officer of Square and creator of Cash App, was found dead following a stabbing in the early hours of April 4. A notice from the San Francisco Police Department explained officers attended to a report of a stabbing at approximately 2:35 am local time, finding a “43-year-old adult male victim suffering from apparent stab wounds.” Lee was a proponent of cryptocurrencies who gained prominence in the tech industry for being the first chief technology officer of the payments platform Square — later renamed Block — and for creating the popular mobile payment service Cash App.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Decentralized exchange dYdX announces ’winding down‘ of services for Canadian users

“We hope that the regulatory climate in Canada will change over time to allow us to resume services in the country,” said the exchange.

Cryptocurrency derivatives exchange dYdX has announced it will be restricting Canadian user accounts over the next seven days in a move to exit the market.

In an April 7 blog post, dYdX said it will be “winding down services” in Canada, starting with halting the onboarding of new users located in the country. On April 14, the exchange will move all existing Canadian users to “close-only mode,” allowing them to only withdraw funds.

“DYdX is committed to providing transparency around product decisions and democratizing access to financial opportunity,” said the exchange. “We hope that the regulatory climate in Canada will change over time to allow us to resume services in the country.”

The move followed the Canadian Securities Administrators announcing additional restrictions for crypto exchanges’ registration requirements in the country. The rules required platforms to be “prohibited from permitting Canadian clients to enter into crypto contracts to buy and sell any crypto asset that is itself a security and/or a derivative.”

Related: GMX and dYdX go head-to-head for the top decentralized derivatives position

In September 2022, many dYdX users and those in the crypto space criticized a promotion from the decentralized exchange offering a $25 deposit bonus for confirming someone’s identity using a live webcam image. The exchange later ended the program, citing “overwhelming demand” rather than some of the privacy concerns put forth.

Magazine: Your guide to crypto in Toronto: Crypto City

Kraken aims for restricted dealer registration in Canada to comply with new rules

In February, Canadian Securities Administrators announced enhanced investor protection requirements for crypto asset traders.

Crypto exchange Kraken has filed a preregistration undertaking with the Ontario Securities Commission in Canada seeking restricted dealer status. United States-based Kraken is already active in Canada and is acting to comply with the new guidance.

Kraken is registered in Canada as a money services business and has been operating there for over 10 years. The Canadian Securities Administrators (CSA) implemented new guidance for crypto asset trading platforms on Feb. 22, requiring Kraken to file a preregistration undertaking legally committing it to observe new investor protections.

The new requirements for crypto trading platforms will be subject to include new custody standards, restrictions on the use of leverage and a ban on trading stablecoins without prior written consent from the CSA. Kraken managing director for Canada Mark Greenberg said:

“We want both existing and prospective clients to know Kraken remains committed to Canada.”

Restricted dealer registration is “a special kind of dealing registration used for firms that do not quite fit under any other category” under CSA definitions. Regulators tailor requirements for firms with this status individually.

Cryptocurrency exchange OKX announced on March 20 that it would stop providing service to Canadian customers within three months due to “new regulations.” OKX added that its withdrawal from the country was temporary and it was working with regulators.

Related: G7 to collaborate on tighter crypto regulation: Report

The CSA is the umbrella organization for Canada’s 13 regional securities regulators. There is no federal Canadian regulator. Registration by one CSA member provides a so-called “passport” for firms doing business in other provinces or territories.

In February, Kraken paid $30 million in penalties and disgorgement in the United States after the Securities and Exchange Commission charged it with failing to register its staking-as-a-service program as a security. Kraken said at the time that it would continue to offer its staking program to non-U.S. customers.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips

G7 to collaborate on tighter crypto regulation: Report

Leaders from Japan, the United States, the United Kingdom, Canada, France, Germany and the European Union are expected to outline a global cooperative strategy for digital assets in May.

The next G7 meeting might bring a push from the seven biggest democracies for tougher regulations on cryptocurrencies around the world, Kyoto news agency reported on March 25.

Together, leaders from Japan, the United States, the United Kingdom, Canada, France, Germany, and the European Union will outline a cooperative strategy to increase crypto transparency and enhance consumer protections, as well as address potential risks to the global financial system, officials told Kyoto. This year’s summit is set to happen in Hiroshima in May.

Among G7 members, Japan already regulates cryptocurrencies, while the European Union’s Markets in Crypto-Assets (MiCA) regulation is set to go into effect in 2024. The United Kingdom is gradually developing its crypto framework, with a special category for crypto assets on tax forms recently introduced and plans for a digital pound in the works.

Related: The limitations of the EU’s new cryptocurrency regulations

Canada treats digital assets as securities and the United States currently applies existing financial regulations to crypto, with some anticipating a crypto regulatory framework from lawmakers in the coming months.

Parallel efforts toward standards for digital assets are being made by the Financial Stability Board (FSB), the International Monetary Fund (IMF), and the Bank for International Settlements (BIS), the group of the 20 biggest economies of the world — collectively known as G20 — announced in February during a meeting in Bengaluru, India.

India’s finance minister, Nirmala Sitharaman, during FMCBG meeting in Bengaluru. Source: Ministry of Finance

Recommendations on the regulation, supervision and oversight of global stablecoins, crypto assets activities and markets are scheduled to be delivered by July and September. It is unclear, however, what the overall tone of the recommendations will be.

For instance, in February the IMF released an action plan on crypto assets, urging countries to abolish legal tender status for cryptocurrencies. The IMF opposition to crypto as legal tender is well known, especially since El Salvador adopted Bitcoin as its official currency in September 2021. The fund, however, has been advocating for countries to adopt greater crypto regulation, while it’s working on an interoperable central bank digital currency platform to connect multiple global CBDCs and enable cross-border transactions.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Crypto Biz: Mastercard opens network to USDC, OKX departs Canada, Bitcoin climbs

Despite global bank turmoil and regulatory crackdowns, traditional and decentralized finance (DeFi) are continuing to blend.

Banks turmoil and regulatory crackdowns happening worldwide have not slowed down the ongoing blending of traditional and decentralized finance (DeFi). The on-ramps connecting the two sides seem even stronger despite the wild winds of change.

Take, for example, the recent issues that Circle-issued USD Coin (USDC) faced when it depegged from the U.S. dollar following Silicon Valley Bank’s collapse. Two weeks later, Mastercard boldly integrated the stablecoin into its infrastructure in the Asia-Pacific region, allowing users to spend USDC through its network. It’s happening, folks!

And let’s not forget about Bitcoin (BTC) — that digital gold is still on the rise and decoupling from Wall Street, once again proving its value proposition and prompting calls for a hedge against equity markets in the long run.

This week’s Crypto Biz documents the latest developments on worldwide crypto adoption, and how banking system fears impact the crypto space.

Mastercard to settle transactions for stablecoin wallet in APAC

Global payment provider Mastercard has made another move into the crypto space to allow retail customers in the Asia-Pacific region to spend stablecoins anywhere Mastercard is accepted. This move was made possible by a partnership with Stables, an Australian stablecoin platform. Users can spend and save USDC by converting it into fiat and settling on the Mastercard network. The wallet will accept deposits in several stablecoins, including Tether (USDT) and Binance USD (BUSD), with all deposits automatically converted into USDC.

MetaMask enables direct crypto purchases in Nigeria

On-ramps for digital assets are also increasing in Nigeria, as crypto wallet MetaMask expanded direct transactions with local banks. MetaMask’s parent firm ConsenSys has partnered with crypto fintech MoonPay, enabling users in the country to purchase crypto via instant bank transfers without requiring a credit or debit card. The integration is estimated to reduce the decline rate for direct crypto purchases in Nigeria from 90% to 30%. Nigeria is a major market for MetaMask, ranking third in mobile monthly active users. Chainalysis ranks Nigeria as one of the top 20 countries in cryptocurrency adoption.

OKX to cease operations in Canada by June 22, 2023

In a “temporary” bye-bye, crypto exchange OKX emailed Canadian users that the firm “will no longer provide services or allow users to open new accounts in Canada starting on March 24, 2023.” OKX cited “new regulations” behind the move, saying it is only temporary while it works with regulators. By June 22, OKX’s customers in the country must close open options, margins, perpetuals and futures positions. Fiat or tokens must also be withdrawn by that date. In February, The Canadian Securities Administrators published a notice requiring crypto exchanges to sign new, legally binding undertakings while they await registration with regulators. 

Off-boarding message sent to Canadian OKX users on March 20, 2023. Source: OKX

Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

With fears of a global banking crisis on the rise, Bitcoin’s value proposition is on full display as its price continues to climb following the collapses of Silvergate, Silicon Valley Bank and Signature Bank. ARK Invest CEO Cathie Wood believes the current decoupling of BTC’s price to the equity markets may attract more institutional investors into Bitcoin over time. As for the impact on Bitcoin’s price from institutional interest, Wood expects that most firms would allocate between 2.5% to 6.5% of their investment portfolios to BTC by 2030, taking the leading cryptocurrency’s price to $1–1.5 million.

The impact of the Credit Suisse bank crisis on the crypto market

How to analyze banks and avoid inaccurate market capitalization indicators — such as the $15.8 billion value of Silicon Valley Bank? Crypto analyst Marcel Pechman delves into the enterprise value metric and how it provides a better picture of a bank’s balance sheet terms by subtracting net debt from market cap. Of course, Pechman first explains the relationship between banking valuation and cryptocurrencies, specifically Bitcoin’s ethos. 

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.