Crypto ATM / kiosk operator in Canada

FINTRAC — AML/CFT, MSB registration, transaction reporting

Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2000) — AML/CFT, MSB registration

VASP: a crypto platform serving Canadians registers with FINTRAC as a money services business (or foreign MSB) for dealing in virtual currency and, for crypto contracts, with the securities regulators, which since 6 August 2024 expect investment dealer registration and CIRO membership rather than restricted dealer status; Binance, whose principal regulator was the Alberta Securities Commission, announced on 12 May 2023 that it would withdraw from Canada.

EXCHANGE: A crypto exchange serving Canadians registers with FINTRAC as a money services business (or foreign MSB) for dealing in virtual currency and, where it trades crypto contracts, with the securities regulators; since 6 August 2024 the CSA expects such platforms to register as investment dealers and join CIRO, and no longer grants time-limited restricted dealer registration or accepts new pre-registration undertakings.

CUSTODY: Under the standard pre-registration undertaking in CSA Staff Notice 21-332 (22 February 2023), a crypto trading platform holds client crypto assets in trust for clients, separate from its own assets, with an Acceptable Third-party Custodian (such as a Canadian custodian or Canadian financial institution, or another custodian meeting the notice's criteria or consented to by the regulator), and keeps at least 80% of the value of client crypto assets with third-party custodians.

CSA Staff Notice 21-327, Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets (16 January 2020), states that a platform is generally not subject to securities legislation only if the underlying crypto asset is not a security or derivative and each contract results in, and is settled by, immediate delivery of the crypto asset to the user.

Registration framework is established through National Instrument 31-103 (NI 31-103) — Registration Requirements, Exemptions and Ongoing Registrant Obligations

NI 31-103 s. 12.1 requires a registered firm's excess working capital (Form 31-103F1) not to fall below zero for 2 consecutive days, with minimum capital of $25,000 for an adviser, $50,000 for a dealer and $100,000 for an investment fund manager; dealers must also maintain bonding or insurance (s. 12.3). Investment dealers that are CIRO (formerly IIROC) members are exempt from ss. 12.1 and 12.3 under s. 9.3(1) unless also registered as investment fund managers.

Under NI 31-103 s. 11.3(1) every registered firm must designate an individual registered in the category of chief compliance officer; the Exempt Market Products Exam is a proficiency option only for an exempt market dealer's CCO (s. 3.10), alongside the PDO or Chief Compliance Officers Qualifying Exam and 12 months of relevant experience.

NI 31-103 sets CCO experience by registration category rather than a general 3-5 year expectation: an exempt market dealer's CCO needs 12 months of relevant securities industry experience in the prior 36 months plus specified exams (s. 3.10), and every registered firm must let its CCO directly access its board of directors (s. 11.4).

Ongoing Focus on Unregistered Platforms: Securities regulators continue to target platforms operating in Canada without registration. This often results in cease trading orders, financial penalties, and requirements for platforms to either register or exit the Canadian market.

Under CSA Staff Notice 21-332 (22 Feb 2023) unregistered crypto asset trading platforms could give a pre-registration undertaking (PRU) to their principal regulator while applying for registration. On 6 Aug 2024 the CSA ended that interim approach for time-limited restricted dealer registration, including new PRUs; new platforms apply directly to the Canadian Investment Regulatory Organization (CIRO). PRUs of ByteX, CatalX and Uphold expired or were withdrawn in 2023.

On 22 Jun 2022 a panel of the Capital Markets Tribunal permanently banned Mek Global Limited (Seychelles) and PhoenixFin Pte. Ltd. (Singapore), together KuCoin, from participating in Ontario's capital markets and ordered an administrative penalty of CAD 2,000,000 plus $96,550.35 in OSC investigation costs for operating an unregistered crypto asset trading platform. Separately, FINTRAC imposed an administrative monetary penalty of $19,552,000 on Peken Global Limited (operating as KuCoin) on 28 Jul 2025 for 3 violations, which Peken has appealed.

On 17 Mar 2022 the Ontario Securities Commission published an undertaking by Binance Holdings Limited and Binance Canada Capital Markets Inc. confirming that activities involving Ontario residents had ceased, after Binance falsely told investors on 29 Dec 2021 that it could keep operating in Ontario. Binance told the Alberta Securities Commission (principal regulator for the CSA) on 2 May 2023 that it would withdraw from Canada and announced the exit publicly on 12 May 2023. FINTRAC imposed an administrative monetary penalty of $6,002,000 on Binance Holdings Limited, as a foreign money services business, on 7 May 2024 for 2 violations; Binance appealed to the Federal Court.

On 22 Jun 2022 a panel of the Capital Markets Tribunal approved a settlement between the Ontario Securities Commission and Bybit Fintech Limited (British Virgin Islands) for operating an unregistered crypto asset trading platform; Bybit disgorged USD 2,468,910, paid CAD 10,000 toward investigation costs, and gave an undertaking not to open new Ontario accounts or offer new products while registration discussions continue, and to wind up its Ontario operations if they fail.

OSC registration assessment rests on three principles: proficiency under Part 3 of NI 31-103, integrity, and solvency through capital and insurance requirements; firms file Form 33-109F6 with audited financial statements and insurance declarations, and OSC staff may request other information to assess fitness for registration.