Bitcoin News Today: Canada's Crypto Cash Loopholes Enable $1.3B Money Laundering Surge

Canada's crypto-to-cash schemes have drawn intense regulatory scrutiny as investigations reveal systemic loopholes enabling money laundering, with authorities struggling to keep pace with the rapid growth of unregulated digital asset services. A recent undercover probe found over 20 unregistered crypto-to-cash services operating across the country, many of which bypassed standard identification checks, according to a report by Crypto News. These operations, concentrated in cities like Toronto and Vancouver, have become a magnet for criminal activity, with experts warning that Canada's fragmented regulatory landscape leaves significant enforcement gaps according to the same report.

The issue has escalated amid revelations that Binance, the world's largest cryptocurrency exchange, continued to channel hundreds of millions in illicit funds from scam networks and cyberheists into its platform in 2024 and 2025. A joint investigation by the International Consortium of Investigative Journalists and The New York Times found that wallets linked to Cambodian money laundering operations and North Korean hackers funneled over $408 million and $900 million, respectively, into Binance accounts. While the exchange has pledged to enhance compliance measures following a $4.3 billion U.S. settlement, the findings underscore persistent vulnerabilities in global crypto oversight according to the investigation.

Canada's regulatory challenges are compounded by its status as a hub for Bitcoin ATMs, with over 3,000 machines-the second-highest concentration globally. These devices, coupled with lax oversight of money services businesses, have created a fertile ground for illicit activity. FINTRAC, the country's financial intelligence unit, has been criticized for being under-resourced to monitor its 2,600-plus registered operators, let alone the unregistered ones identified in the investigation. "The reality is that no one's asking questions," said Nick Smart of Crystal Intelligence, who noted Hong Kong's similar crypto-to-cash operations processed $2.5 billion in 2024.

In response, Canada is advancing its most comprehensive crypto regulations to date, including stablecoin rules modeled after the U.S. GENIUS Act. The 2025 federal budget will require stablecoin issuers to maintain full reserves and implement robust risk management systems, with the Bank of Canada allocating $10 million for oversight according to the report. Meanwhile, Singapore's SGX has launched Bitcoin and ether perpetual futures contracts to meet growing institutional demand, highlighting the broader push for regulated crypto markets.

The crisis has also reignited debates about the role of high-leverage trading in exacerbating market instability. A recent 24-hour liquidation wave exceeding $1.1 billion-largely from long positions-has drawn comparisons to the 2022 FTX collapse, with Bitcoin's price dropping over 22% from its October peak. While Kraken CEO Michael Sethi downplayed concerns about the dip, he acknowledged the need for clearer market education on crypto's volatility.

As regulators grapple with these challenges, the industry's future hinges on balancing innovation with accountability. With Canada's enforcement actions-including the seizure of $56 million CAD from TradeOgre-demonstrating a crackdown on illicit operators according to the report, the path forward remains fraught with tension between fostering growth and curbing abuse.