Country overview

#3
Canada

Country stats

Rating Points
440
This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.
Crypto Penetration
4.1%
Estimated percentage of crypto users out of the country's total population based on public data.
Legal Entities
1254
Number of crypto companies registered in the country based on regulator data if available or other types of public data.
Regulation Points
220
An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.
Amount of crypto users
1 566 200
Total amount of crypto users out of the country's total population based on public data.
Taxation points
14
This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.
Market volume points
165.6
A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.
Status of crypto
Legally allowed
General status of cryptocurrency regulation in this jurisdiction.
Crypto payments
Legally allowed
The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.
Security Level
Minor danger
The overall level of security in a given country based on open data.
Crypto Salaries
Legally allowed
The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.
Business Climate
Very Good
Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.
Stablecoin Regulation
Basic
This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.
Bad Factors
No
This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.
Types of licenses
Crypto-to-crypto
This license type allows VASP to provide legal exchange from one cryptocurrency to another.
Crypto-to-fiat
This type of license regulates the exchange from cryptocurrency to fiat.
Wallet/Custody
This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.
ICO/STO
This indicator describes legal procedures for token sales and security token issuance. This country has a clear regulation framework and licensing procedures for entities that provide this activity.
Cryptofund
This indicator means that investment funds, trusts, and crypto funds can get regulator approval to provide their activity in the country.
Good
Medium
Bad
intro

Сurrently, Canada is known as a relatively welcoming and accessible jurisdiction for crypto entities outside the European Union. Like most other British Commonwealth countries, it has an enhanced crypto regulatory framework.

Security level
Crypto Payments

Crypto payments are legal since they are mentioned in the official tax guide (4) by the Canada Revenue Agency (CRA), “in 2014, the Senate reviewed the issue of taxation on cryptocurrency”. According to Coinfirm (5), cryptocurrencies are legal for barter transactions, although payment of state services in crypto is illegal.

Crypto Salaries

Salaries in crypto are legally allowed in Canada according to FAQ about crypto income (6) from the local tax authority.

“If an employee receives digital currency as payment for salary or wages, the amount (in Canadian dollars) will be included in the employee’s income according to subsection 5(1) of the Income Tax Act”.

Legal

According to Coinfirm (7) assumption

The nation’s regulations on crypto are robust and touch on Anti-Money Laundering/Countering the Financing of Terrorism, ICO/STO securities laws and more. Canada’s Financial Intelligence Unit, FINTRAC, has oversight over cryptoasset trading platforms (CTPs) which are regulated as Money Service Businesses (MSBs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR).

According to law firm SIA PARTNERS (8), crypto exchanges (CTPs) and wallets need to get a Money Services Business (MSB) license in Canada.

Cryptocurrency businesses in Canada are regulated in the same way as the companies that provide money services. Cryptocurrency businesses have the same record-keeping and verification obligations as the Fiat Money Service Businesses.

Full details of MSB and other crypto regulations in Canada may be found in the document “The Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements” (9).

This is a joint paper of CSA (Canadian Securities Administrators) and IIROC (Canadian Investment Regulatory Organisation) published in March 2021. According to this document, all crypto entities must register with the Financial Transaction Analysis Centre of Canada (FinTRAC). According to it, leverage and margin trading need IIROC license and approval.

Canada has two levels of crypto regulation framework - the federal and local (state level).

TagLicenseRegulator
#cryptotofiatCrypto asset trading platform (CTP) Money Services Business (MSB) authorization from FINTRAC
#cryptotocryptoCrypto asset trading platform (CTP)Money Services Business (MSB) authorization from FINTRAC
#walletCrypto asset trading platform (CTP)Money Services Business (MSB) authorization from FINTRAC
#ICO/STOLocal approval from the Security&Exchange Commision of State. On Federal Level - the Canadian Securities Administrators (CSA) and IIROC
#cryptofundETFCase by case

It’s hard to define the total amount of crypto entities in Canada. However, according to Coincub, there are 1254 entities there.

No cash deposit requirement: Unlike many countries that require a minimum initial capital to apply for a license to deal with electric money or virtual currencies, there is no minimum cash deposit requirement for a Canadian cryptocurrency company.

Taxation
Tax nameIndex
PIT tax Min15
PIT tax Max54.8
Min Individual CGT (for crypto)22.5
Max Individual CGT tax (for crypto)27.4
Corporate tax (CIT)23
Wealth tax Min0
Wealth tax Max0
Mining tax

According to our research, the most common crypto taxes in Canada are:

CIT is for business activity (including mining and trading), and CGT is for individuals.

Total PIT (federal+state) - 44.5-54.8%

CGT: 22,25-27,4%

Federal CIT - 15%, provincial CIT - 8-16%

This information is based on the PWC Canada Tax Summary (10), Law review (11), and position of local tax authority (12). You may see the most important quotes from the Canada Revenue Agency below.

Quote

“The CRA generally treats cryptocurrency like a commodity for purposes of the Income Tax Act. Any income from transactions involving cryptocurrency is generally treated as business income or as a capital gain, depending on the circumstances. Similarly, if earnings qualify as business income or as a capital gain, then any losses are treated as business losses or capital losses.

“The income you get from disposing of cryptocurrency may be considered business income or a capital gain. In order to report it correctly, you must first establish what kind of income it is.

Lastly, cryptocurrency mining in the country is taxed as any business according to the CRA position (13).