Four bitcoin exchanges was too many, according to Dave Bradley, the operator of Calgary-based over-the-counter (OTC) bitcoin brokerage Bitcoin Brains.

Bradley is referring to CAVIRTEX, Cointrader, Quadriga CX and Vault of Satoshi, what had been the four exchanges serving the Canadian market at the start of 2015. In the last two months, however, both CAVIRTEX and Vault of Satoshi, the market’s oldest and arguably most visible bitcoin trading platforms, abruptly closed.

The sudden shutdown of CAVIRTEX, in particular, has caught much of Canada’s bitcoin ecosystem by surprise, the notice following on the heels of the decision by the province of Quebec to require licensing for bitcoin trading platforms, a move that further thrust regulation in the country into uncertainty.

Adam O’Brien, president of BTC Solutions, a Vancouver-based leveraged trading platform, downplayed that the events were likely to have much of an effect on bitcoin consumers, even if the bitcoin business sector is likely to see shake-ups.

O’Brien told CoinDesk:

“Consumers use bitcoin because they like bitcoin. If they have to buy from an ATM, an exchange or OTC it won’t matter.”

This sentiment was echoed by Leo Dominguez, CEO of bitcoin ATM operator BitSent, who nonetheless spoke to the impact the closure would have in the market.

“It takes away from the legitimacy of bitcoin, CAVIRTEX was one of the longest standing exchanges in the world, three-and-a-half years is a long time,” Dominguez said.

Elsewhere there was agreement that though the exchange closure wouldn’t bring positive publicity to the industry, it would at least create new opportunities.

Thrust into spotlight

Initial signs are Canada-based bitcoin users are migrating their accounts to other available offerings, with both Quadriga and Cointrader reporting they’ve seen an uptick in new accounts. Although, this hasn’t yet translated to volume due to the fact that new customers are still filing through the enrollment process.

Cointrader COO Mitchell Demeter suggested that his exchange has seen a 300% increase in new sign-ups in the last 24 hours. Cointrader launched its order-book exchange in late 2014, and is currently offer zero-fee trading through April

Gerald Cotten, CEO of Quadriga, indicated that its verification processes were likely to stem trading volume for a few days, though he noted his exchange had seen an increase.

“It is likely that Quadriga’s trading volumes will increase later this week as we continue to absorb clients from CAVIRTEX,” he added.

Quadriga charges a 0.5% fee on all completed trades.

Stepping up

Both Quadriga and Cointrader indicated in statements that they intended to vie to become Canada’s leading exchange, and that they were likely to benefit from an increase in liquidity in absence of major competitors.

Demeter stressed Cointrader’s comparably long history, as the exchange, together with bitcoin ATM provider Robocoin, launched what is considered the world’s first bitcoin ATM in 2013.

“We built a fairly long track record. We have a lot of relationships and support from the community,” Demeter said, adding that his exchange uses CrowdCurity to ensure its security, and insures customer deposits through a partnership with bitcoin security specialist Xapo.

Cotten, in turn, spoke to Quadriga’s security strengths, noting that the exchange uses multi-signature cold storage to secure bitcoin holdings. Fiat holdings, he continued, are held at unspecified Canadian financial institutions.

“Quadriga takes security seriously, and employs a number of policies and procedures to ensure that both client information and client funds remain completely safe,” he said.

Lingering questions

Though both exchanges are competing for increased attention, members of the local market were quick to weigh in on which option they might prefer.

At press time, Bradley was still debating which exchange Bitcoin Brains might leverage, but reported he was reasonably confident in either choice.

“Well both of the remaining exchanges seem pretty good, professionally run, which one we send our volume to will probably depend on price and liquidity,” he said.

Dominguez pointed to the longstanding banking issues in the ecosystem as evidence neither might be able to prosper in the long run.

“People want bitcoin but we’re having problems running businesses due to banking relationships,” he said. “We need to fix the banking issue in Canada.”

Bradley agreed that this would mean the market is likely to see further turbulence, adding: “I think it was pretty inevitable, hopefully the market can support two exchanges.”

Limited impact to existing services

As the recent Bitstamp hack attested, an offline exchange has effects in the wider bitcoin ecosystem. However, in the case of CAVIRTEX, local companies suggested they weren’t as impacted by the sudden stop in services.

BTC Solutions, for example, operates ATMs but indicated that it uses Quadriga as a source of liquidity. BitAccess, a leading bitcoin ATM manufacturer that has been active in the Canadian market, also suggested its operators were impacted, but that they would be able to easily transition their operations.

“We are agnostic to any exchange and will switch our operators to another exchange,” co-founder Haseeb Awan said. “BitAccess works with many exchanges and it is up to operator to pick the exchange of his or her choice. Being in Canada and our relationship, CAVIRTEX was choice for multiple operators.”

CAVIRTEX indicated it has since sold all of its 10 bitcoin ATMs to BitSent, a company is seeking to operate 20 such machines across Canada. BitSent reported no disruption as it draws from an internal pool of liquidity, though it has now switched to Quadriga.

“We have been affected by the CAVIRTEX shut down but thankfully we have alternatives setup just in case,” Dominguez said.

Seizing opportunity

In the absence of these major names, however, other local entrepreneurs expressed an interest in entering the market, or suggested new companies may seek to capitalize on what they called the current opportunity.

Demeter acknowledged that the biggest threat to Cointrader would be from outside competition, but noted its experience and relationships with local banks as an advantage.

“Operating an exchange here is very difficult,” he said. “We’ve built relationships here to operate an exchange successfully so for someone coming into the market, [new customers would] be better off with us because it isn’t a deep market.”

Mitchell Callahan, founder at Saucal, the company behind merchant point-of-sale solution Pocket POS, for instance, expressed at least a cautious initial interest.

“An exchange going down is never good for public image … but for me it creates more opportunities,” Callahan said.

Bradley went on to suggest he saw the opening as one that would benefit major names in the international market, a development that would certainly bring yet another dramatic turn to the ecosystem.

“Coinbase is expanding worldwide. Canada seems like an obvious choice once there is regulatory clarity,” Bradley added.

Canada image via Shutterstock