Coinsquare COO shares thoughts on being the first regulated crypto trading exchange in Canada

It’s a story that still haunts the early generation of Canadian crypto users to this day. Four years earlier, Gerald Cotten, co-founder of Canada’s then largest cryptocurrency exchange QuadrigaCX, died under mysterious circumstances in India. But before he passed away, Cotten took virtual keys to digital wallets and moved them to cold storage, resulting in the permanent loss of $190 million in user funds.

The incident sparked a crisis of confidence in the country’s emerging crypto sector and left regulators deeply skeptical of blockchain technology. However, old wounds eventually heal. Fast forward to today and Coinsquare has taken over to become one of Canada’s largest crypto exchanges, with $8 billion in cumulative trading volume since 2014.

In an interview with Cointelegraph’s business editor Sam Bourgi, Coinsquare CEO Eric Richmond explained that a regulatory framework now exists to prevent similar incidents in the future:

“We have taken a much different approach than the U.S. Unlike firms south of the border, all crypto trading platforms here must be registered with the Investment Industry Regulatory Organization of Canada (IIROC). There is a backlog of processing applications at the moment, while we got our submitted from November 2020, as we wanted to be one of the first regulated players out there.”

As the regulation only came into effect recently, all crypto exchanges are given a two-year exemption where they must register with IIROC during this period. Currently, Coinsquare is the only firm in the area that is IIROC registered. Likewise, the company has a strict set of rules in place when it comes to listing new tokens to ensure users don’t fall victim to fraud:

“We put it through evaluating the underlying technology, the marketing, the team behind it, analyzing potential legal issues, irregular price movements, etc. We go through his in-depth analysis across different teams, such as compliance, business, legal and security. It deals about really understanding the token. And if it passes the tests, the listing threshold is set.”

Canadian regulators have taken a tough stance on exchanges that allegedly do not comply with the new rules. In March, Binance ceased operations in the province of Ontario and admitted to the Ontario Securities Commission (OSC) that it was unregistered there. Similarly, the OSC took enforcement action against cryptocurrency exchanges KuCoin and Bybit, alleging a violation of securities laws.