What has been described as a mass crypto exodus out of Canada has been greatly exaggerated, Crystal writes.

Driving the news: There have been some noteworthy departures, namely the world's largest crypto exchange Binance, but also ByBit, OKX and Paxos — all citing regulation.

• "Binance will be joining other prominent crypto businesses in proactively withdrawing from the Canadian marketplace," the company tweeted in May. (Something else likely moved Binance, see item 3 below.)

Context: The goodbyes came weeks after the Canadian Securities Administrators asked crypto exchanges to file pre-registration undertaking forms and adhere to newly FTX- and Celsius-inspired guidelines.

• They included new disclosures, prohibitions on things like margin and leveraged trading, as well as restrictions around stablecoins — the latter of which stuck in Binance's craw.

Yes, but: One of the longest-running crypto exchanges, Kraken, operates there and thinks it's fine. It even says Canada's rules are a "great model to use worldwide."

The big picture: To Mark Greenberg, managing director at Kraken Canada — a team of some 250 Krakenites — the country's approach to digital assets regulation makes it a relatively less onerous place to operate relative to other jurisdictions where rules remain unclear.

• "While some things are no longer allowed in Canada, rules are helpful, whereas in other markets, things aren't that clear," Greenberg says.
• Kraken Canada, for example, disallows margin and futures trading products for retail investors, per the rules.

Yes, but: On-chain staking is allowed in Canada, Greenberg says, under certain conditions.

• Recall that the company stopped offering staking services to customers in the U.S. after settling alleged securities laws violations with the SEC, without admitting to wrongdoing.

What others are saying: "We had our Celsius and FTX, only they were called Einstein and QuadrigaCX, and it was [earlier]," Koleya Karringten, executive director of industry group Canadian Blockchain Consortium, tells Axios.

• That helped Canada get a jump-start on what Karringten calls the "gold standard" for crypto regulation, she says, adding that there was plenty of time and avenues for exchanges to comply.
• "There was no reason, legally, why an exchange couldn’t have gone under the new pre-registration undertaking," she says, referencing those who missed the deadline.

The latest: There is now a Coinbase Canada.

The big picture: "The market is open for business. The ones that are leaving — it's not the worst thing," Karringten says.

Most crypto exchanges in Canada do not support the Canadian dollar.

• It's loony (not loonie), Crystal writes.

Zoom in: Kraken is pretty much the only one that does, according to Kraken and data from Kaiko.

• Binance Canada, when it operated there, did not support CAD nor CAD-trading pairs.
• Coinbase Canada does not yet offer CAD-spot trading pairs, but it is working on it, according to a company spokesperson.

Be smart: So if CAD-denominated trading volume is the best proxy to measure crypto activity in Canada, Kraken is it.

Why it matters: "If you're a Canadian customer and get paid in CAD dollars and you want to purchase crypto, it's a single transaction on Kraken," Kraken's Greenberg tells Axios.

• On other exchanges, one might have to convert to U.S. dollars first, which means more transaction fees.

Of note: Most Canadian exchanges have U.S. banking relationships, per Canadian Blockchain Consortium's Kerringten, because they're "friendlier" toward crypto than banks in Canada.

The Ontario Securities Commission is looking into Binance for possibly sidestepping rules in its jurisdiction, Crystal writes.

Driving the news: The investigation was mentioned in a filing submitted by Binance and first reported by the Financial Post, a detail the crypto exchange neglected to mention when it announced its exit from the country on May 12.

• Binance got word of the investigation on May 10, according to the filing.

The intrigue: Binance Canada's team was something of a who's who of compliance experts, per their LinkedIn profiles.

• Former Binance Canada CEO Lawrence Truong touted his background in compliance this time last year; he appears to no longer be with the firm as of May.
• James Moore, chief anti-money laundering officer, used to work at the Alberta Securities Commission where he was manager of the Joint Serious Offences team and the Intelligence Program.
• Michael MacLeod, who was most recently a senior compliance officer, and now a regulatory exam and audit officer, hailed from the Alberta Securities Commission.
• Alex C., manager of global sanctions and counter-threat finance at Binance as of January 2023, was a compliance lead at Kraken.

What they're saying: Binance did not respond to multiple Axios queries on Wednesday and Thursday.

• By the looks of Binance's filing, it is pushing back on the OSC investigation — asking for it to be revoked on the grounds that it never registered with that regulator and that its inquiry is "overly broad," the document shows.
• It also wants quashed a summons that asks for information and other material the crypto exchange describes as "an inappropriate fishing expedition into the affairs of Binance."

The bottom line: The crypto exchange and its founder Changpeng "CZ" Zhao are at the center of many inquiries.

⛓ Blockchain bridge builder Multichain can't locate its CEO, which means it can't access its servers. (Decrypt)

🚪 Binance reportedly has begun layoffs (Wu Blockchain), but the company says it's simply increasing talent density. (The Block) 🤔

🗄 Cumberland will no longer run its over-the-counter trading of filecoin due to regulatory concerns. (The Block)

👮‍♂️ A gunshot death of a Missouri physician and Bitcoin entrepreneur. (Decrypt)

Anyone that messes with cryptocurrencies almost certainly sometimes uses MetaMask, the ubiquitous browser wallet most closely associated with Ethereum, Brady writes.

Driving the news: Demox Labs aims to build the next-generation wallet (among other things) and to that end has raised $4.5 million led by HackVC to support the development of various products for the privacy-oriented Aleo blockchain.

• Aleo is a whole different kind of blockchain that leans heavily on zero-knowledge proof technology, and Demox is looking to secure the top spot among Aleo users as the wallet of choice.
• Aleo aims to provide the sort of services that blockchains like Ethereum and Avalanche can provide, but with privacy protections in place so everyone can't see what you're doing.

What they're saying: "We're skeptical of a lot of value propositions that people put out there. I think the privacy one is pretty clear," Evan Marshall, a co-founder of Demox, tells Axios.

• "You should be able to pay your friends for dinner without telling Peter Thiel."

Of note: Aleo raised $200 million in an early 2022 Series B. The yet-to-launch blockchain's team is aiming to go live this year.

Be smart: On Ethereum, every single calculation is done on-chain, in public (that's why especially complicated operations can get really expensive).

• Aleo lets the users run calculations off-chain and then prove their validity on-chain (basically, the chain checks their work and the transaction gets approved if it checks out).
• This lowers the load on the chain and makes it more feasible to hide user activity.

Long term: Demox is starting with Leo Wallet, but the goal is to be more like the development firm, ConsenSys, which has made a number of products for the Ethereum ecosystem, including MetaMask.

• It also made Infura, which allows apps to quickly know the state of the blockchain, and Truffle, a set of smart contract development tools.
• For Leo, there's a lot of ways to make revenue if a company is able to build a very popular crypto wallet. Its first priority is building a good product and getting lots of traction for it.

Yes, but: Early indications suggest that the U.S. government might take a dim view of privacy technology when it enables financial transactions. Case in point, the sanctioning of Tornado Cash, which was open-source software running autonomously.

• "I think there's still an open question around regulation. We think it's really important for people to have privacy and sovereignty over your own capital," Barron Caster, the other co-founder of Demox, says.