Canada Compliance Report

Generated 2026-10-23

Comprehensive Framework

Regulatory Overview

Regulatory Status: Dedicated crypto/VA legislation, licensing regime, active enforcement
Key Regulator(s): Bank of Canada, Ontario Securities Commission
Risk Level: low
Primary Legislation: Budget 2025 Implementation Act, No. 1, S.C. 2026, c. 3; Royal Assent 26 March 2026, The Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000,
Travel Rule: Not adopted
Tax Reporting: The CRA treats crypto-assets, which it describes as digital representations of value relying on cryptographically secured distributed ledgers, as giving rise to either business income or capital gains on disposition, and requires crypto records to be kept for at least six years from the end of the last taxation year they relate to.. A capital gain on crypto equals proceeds of disposition minus the adjusted cost base and disposition costs; identical properties use an averaged cost base under Income Tax Act s. 47. In the CRA example, crypto bought for $3,500 and sold in 2025 for $4,000 gives a $500 gain and a $250 taxable capital gain.. For individuals, all capital gains (including gains over $250,000) have a 50% inclusion rate. The proposed two-thirds inclusion rate for gains over $250,000 was cancelled and never enacted.. Losses: 50% allowable capital losses offset taxable capital gains (not other income); excess carried back three years or forward indefinitely.. The CRA lists factors that may indicate crypto-asset activity is a business rather than capital: frequency of transactions, short period of ownership, knowledge of crypto-asset markets, time spent studying them, debt financing of purchases, and advertising a willingness to buy.

Key Facts

aml FINTRAC website: www.fintrac-canafe.gc.ca
enforcement 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. The Canadian government has ordered Hikvision to cease operations for Canadian residents unless it registers, but this is a company-specific regulatory action, not a general rule for all Canadian residents. Providing investor compensation or making payments for regulatory costs. There is no registration process required for automakers to enter or re-enter the Canadian market under the current Canada-China EV agreement, which allows direct shipments of Chinese EVs under a new tariff regime. 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. 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.
general The Proceeds of Crime (Money Laundering) and Terrorist Financing Act was amended in 2014 to cover virtual currency dealers; those amendments came into force on 1 June 2020, requiring dealers to register with FINTRAC as money services businesses. The Retail Payment Activities Act (S.C. 2021, c. 23, s. 177) makes the Bank of Canada the supervisor of payment service providers: its registration provisions came into force 1 Nov 2024, section 23 on 16 Nov 2024, and the risk-management and funds-safeguarding provisions on 8 Sep 2025. Under section 4 of the Payment Clearing and Settlement Act, the Governor of the Bank of Canada may designate a clearing and settlement system that could pose systemic risk or payments system risk, bringing it under the Bank's oversight when the Minister of Finance considers designation in the public interest. Registration requirement: crypto trading platforms operating in Canada must register with the provincial or territorial securities regulators; the CSA and CIRO expect them to register as investment dealers and become CIRO members (6 August 2024), and the OSC list of 25 September 2026 shows 7 investment dealers and 6 restricted dealers registered for Ontario. Restricted dealer category: Joint CSA/IIROC Staff Notice 21-329 (29 March 2021) let platforms trading crypto contracts register as restricted dealers for an interim period generally expected to be two years while seeking investment dealer registration and IIROC membership; the CSA ended that interim approach on 6 August 2024, and six platforms remain restricted dealers on the OSC list of 25 September 2026. OSC staff may review registered and unregistered crypto trading platforms' compliance with securities law, including advertising and marketing; false or misleading advertising raises concerns about a firm's fitness for registration (Joint CSA-IIROC Staff Notice 21-330, 23 September 2021). Segregation of Client Assets: Client crypto assets must be held in trust, separate from the platform's proprietary assets. CIRO's Digital Asset Custody Framework imposes specific, tiered custody requirements for Dealer Members, including qualified custodians and robust cold storage measures, which modernizes the earlier general statement.
licensing FINTRAC — AML/CFT, MSB registration, transaction reporting CSA — coordinates provincial and territorial securities regulation of crypto trading platforms through CSA Staff Notice 21-327 (16 January 2020) on when securities law applies, Joint CSA/IIROC Staff Notice 21-329 (29 March 2021) on compliance, and the 6 August 2024 expectation that platforms register as investment dealers and become CIRO members. Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2000) — AML/CFT, MSB registration CSA Staff Notice 21-327 (16 January 2020) sets out when securities legislation applies to crypto trading platforms; the compliance and registration framework followed in Joint CSA/IIROC Staff Notice 21-329 (29 March 2021), the day the OSC told platforms to start registration or face enforcement action, and the OSC began proceedings against a non-compliant offshore platform on 25 May 2021. 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. 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. 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. FINTRAC is Canada's financial intelligence unit and anti-money laundering and anti-terrorist financing supervisor; it does not license crypto businesses but registers money services businesses, including virtual currency dealers, under PCMLTFA s. 11.1.
sandbox The Canadian Regulatory Sandbox provides a controlled environment for innovative financial services, including cryptocurrencies and digital assets, allowing firms to test new products and business models under supervision. The sandbox operates within the framework of federal regulations governing financial institutions and is overseen by the Office of the Superintendent of Financial Institutions (OSFI). Firms seeking to participate in the sandbox must comply with existing licensing requirements for financial institutions, including obtaining appropriate licenses from OSFI or other relevant regulators. Participants must adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) obligations as stipulated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). Non-compliance with sandbox conditions or regulatory requirements may result in enforcement actions, including warnings, fines, or revocation of licenses. Cryptocurrency transactions within the sandbox are subject to existing Canadian tax rules, including income tax on gains and GST/HST on supplies. Potential gaps include the need for clearer guidelines on data privacy, cross-border compliance, and the scalability of sandbox outcomes to broader market conditions. Policy on Regulatory Sandboxes - Canada.ca
securities Provincial and territorial securities legislation applies to crypto assets that are securities or derivatives, and CSA Staff Notice 21-327 (16 Jan 2020) states that a platform's contractual right to a crypto asset may itself be a derivative or a security such as an investment contract unless the asset is immediately delivered; exempt distributions of crypto securities rely on the prospectus exemptions in NI 45-106. The regulators of crypto trading platforms are the provincial and territorial securities regulators acting through the CSA, each platform dealing with a principal regulator: because Binance Canada's head office was in Calgary, the Alberta Securities Commission was its principal regulator, and Staff Notice 21-329 sets distinct approaches for Québec's AMF and the Alberta, British Columbia, Manitoba and Saskatchewan regulators. Crypto asset trading platforms that trade crypto assets that are securities or derivatives, or crypto contracts without immediate delivery, are subject to securities legislation and must register (CSA Staff Notice 21-327; OSC registration call of 29 Mar 2021); issuers relying on the prospectus exemptions listed in section 6.1 of NI 45-106 must file Form 45-106F1 on or before the 10th day after the distribution. The CSA has amended NI 45-106 to specifically track cryptoasset investment funds and digital coin/token distributions by introducing security code "DCT," demonstrating active regulatory adaptation to crypto markets. CSA Notice of Amendments to National Instrument 45-106 Practical reality: crypto issuers and funds must navigate a patchwork of provincial requirements coordinated through CSA instruments; the framework is operational but compliance is complex, requiring both securities registration (unless an exemption applies) and filing obligations that have been specifically tailored to cryptoassets since 2018. CSA Notice of Amendments to National Instrument 45-106 The Canadian Securities Administrators coordinates the provincial and territorial securities regulators; National Instrument 45-106 Prospectus Exemptions and its Form 45-106F1 are adopted in all CSA jurisdictions, and the 2018 Form 45-106F1 amendments came into force in all CSA jurisdictions on 5 Oct 2018. Key provincial regulators include the Ontario Securities Commission (OSC) (www.osc.ca), British Columbia Securities Commission (BCSC), Alberta Securities Commission (ASC), Financial and Consumer Affairs Authority of Saskatchewan, Manitoba Securities Commission, Autorité des marchés financiers (AMF) in Québec, Financial and Consumer Services Commission (New Brunswick), Nova Scotia Securities Commission, and the Office of the Superintendent of Securities in Prince Edward Island. CSA Notice of Amendments to National Instrument 45-106 Exempt (non-prospectus) distributions of crypto assets that are securities rely on National Instrument 45-106 Prospectus Exemptions; its Form 45-106F1 Report of Exempt Distribution came into force in all CSA jurisdictions on 30 Jun 2016, and the CSA's amendments published 19 Jul 2018 took effect 5 Oct 2018.
stablecoin Regulatory Body: OSFI is responsible for overseeing banks and other financial institutions that may issue stablecoins. The CSA oversees securities issuers, ensuring that any stablecoin issued as a security complies with the necessary rules. Cross-Border Regulatory Coordination: Limited discussion on how Canada coordinates with international regulators to address stablecoin activities outside its borders. Technological Innovation Gaps: Emerging technologies such as decentralized finance (DeFi) platforms may require additional regulatory attention to ensure compliance and consumer protection. Quantitative Risk Assessments: Few quantitative assessments of risk exposure for stablecoin issuers, which could hinder effective risk management strategies. Engage in bilateral and multilateral agreements with jurisdictions such as the United States, European Union, and FATF members to harmonize stablecoin regulations. Establish a dedicated task force within OSFI/CSA to monitor international regulatory developments and facilitate timely updates to Canadian policies. Implement sandbox environments for DeFi platforms and other innovative stablecoin technologies to test compliance measures in a controlled setting before broader deployment. Collaborate with tech companies and academic institutions to develop risk assessment tools tailored to emerging blockchain applications, ensuring that oversight keeps pace with technological advancements.
status Canada regulatory status: no single crypto statute; crypto trading platforms are registered by provincial and territorial securities regulators coordinated by the CSA (CSA SN 21-327, 16 January 2020; CSA/IIROC SN 21-329, 29 March 2021), virtual currency dealers have registered with FINTRAC as money services businesses since 1 June 2020, and the federal Stablecoin Act (S.C. 2026, c. 3) received Royal Assent on 26 March 2026 and comes into force by order in council. Registration helps protect investors because securities regulators only register firms and individuals if they are properly qualified The CSA published modernized registration information requirements in December 2021 to establish a more efficient registration and oversight process
tax The CRA treats crypto-assets, which it describes as digital representations of value relying on cryptographically secured distributed ledgers, as giving rise to either business income or capital gains on disposition, and requires crypto records to be kept for at least six years from the end of the last taxation year they relate to. A capital gain on crypto equals proceeds of disposition minus the adjusted cost base and disposition costs; identical properties use an averaged cost base under Income Tax Act s. 47. In the CRA example, crypto bought for $3,500 and sold in 2025 for $4,000 gives a $500 gain and a $250 taxable capital gain. For individuals, all capital gains (including gains over $250,000) have a 50% inclusion rate. The proposed two-thirds inclusion rate for gains over $250,000 was cancelled and never enacted. Losses: 50% allowable capital losses offset taxable capital gains (not other income); excess carried back three years or forward indefinitely. The CRA lists factors that may indicate crypto-asset activity is a business rather than capital: frequency of transactions, short period of ownership, knowledge of crypto-asset markets, time spent studying them, debt financing of purchases, and advertising a willingness to buy. To avoid double taxation on reinvested capital gains, investors must adjust the adjusted cost base (ACB) of their Canadian ETF holdings. The CRA requires crypto-asset records to be kept for at least six years from the end of the last taxation year they relate to, covering each transaction (date, quantity, Canadian-dollar value, counterparty or wallet address), wallet addresses and balances, and exchange trade and deposit records. Canada has not yet enacted Crypto-Asset Reporting Framework reporting by crypto platforms: Budget 2025 deferred CARF to 1 January 2027, and Bill C-31, which implements it for the 2027 and later calendar years, had not reached third reading as of 14 October 2026.
travel rule Canada's travel rule has applied since 1 June 2021 to virtual currency transfers that must be recorded, which for MSBs means transfers worth $1,000 or more; CAD 10,000 is the separate Large Virtual Currency Transaction Report threshold. Sending VASPs must include required PII (originator/beneficiary name, address, account/reference number) with transfers. Receiving VASPs must take reasonable measures to obtain missing information, with risk-based policies for allowing, suspending, rejecting transactions, or follow-up actions. Canada's Crypto-Asset Reporting Framework is not yet in force: Budget 2025 deferred it to 1 January 2027, and Bill C-31, which would implement it for the 2027 and later calendar years, had not reached third reading as of 14 October 2026. VASPs must also meet broader record-keeping and reporting under PCMLTFA. FINTRAC's guidance on transaction reporting (travel rule) is subject to ongoing updates as Canadian regulators are proposing new bans on crypto ATMs and reporting emerging extortion threats, indicating the existing guidance may not reflect current enforcement priorities. PCMLTFR s. 124.1(1)(a) requires a financial entity, MSB or foreign MSB that must keep a record of a virtual currency transfer to include with it the name, address and any account or reference number of both the originator and the beneficiary. Persons dealing in virtual currencies (exchange or transfer services) are money services businesses under PCMLTFA s. 5(h)(iv), or foreign MSBs under s. 5(h.1)(iv) if they have no place of business in Canada but direct services at Canada, and must register with FINTRAC under s. 11.1 before operating.

Sources

This report is AI-generated from publicly available regulatory sources. Last updated: 2026-10-19. View full profile