Country overview

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.

According to our rating, Canada has a minor level of danger. The country has 55.2 points (from 100) for safety in Numbeo crime rating (1). The homicide level (2) is 2,1 per 100,000 a year, and the firearm-related death level (3) is 1,94 per 100,000 a year.

Crypto payments have been legal since 2014 according to Canada Revenue Agency (CRA) official tax guide (4), when 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.

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”.

Сanada has a clear crypto regulation framework, which defines most operations and activities with digital assets. The basis for this regulation are local AML/CFT rules. Cryptocurrency businesses have the same record-keeping and verification obligations as the Fiat Money Service Businesses (MSB) - they need to register in Canada’s Financial Intelligence Unit (FINTRAC) and get Money Service Business License. According to law firm SIA PARTNERS (8) crypto exchanges (CTPs) and wallets need to get a Money Services Business (MSB) license in Canada. These basic regulations are in power since 2020. 

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). Leverage and margin trading need IIROC license and approval.

While new licensing requirements weren't implemented Canada was a simple jurisdiction to get crypto license. It’s hard to define the total amount of crypto entities in Canada. However, according to Coincub, there were 1254 entities there.

However, over time, the requirements and practices for regulating crypto transactions in Canada became more complex in 2023-2024. Security regulators of Canadian states and the Federal Security Regulators Organization - CSA joined the crypto regulation agenda. From 2023, some stablecoins may be qualified by CSA as securities, which means that transactions with them require a license from CSA or local securities commissions of Canadian states. Because of this update, many exchanges have stopped operation in the country (Binance, Blockchain.com). In general, part of crypto platforms' activities now fall under CSA regulation and need authorization from this body to operate in the country.

In addition, Canada is improving fintech legislation, because of thay crypto payment providers must obtain a new type of license from the Bank of Canada. It's called RPAA license and its regulated by RPAA act. In Novemver 2024 this license will become necessary.

Indeed, the procedure for obtaining licenses in Canada is quite complex. In the sense that it may require interaction and inspection of the company by several regulators at once:
-AML/CFT (FINTRAC)
-MSB registration
-CSA
-Bank of Canada
-Canadian States' regulators 

However, the Canadian market is still attractive and companies, that want to do business within the country, must comply with all legal requirements. 

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.

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

1)Numbeo crime rating. Statistics

2)Homicide level. The list of countries by UNODC homicide rate.

3) Firearm-related death. Historical list of countries by firearm-related death rate

4 and 12)Guide for cryptocurrency users and tax professionals

5 and 7)Canada Crypto Regulations. PDF-file

6)Virtual Currency

8)Canadian Securities Regulations For Crypto Businesses.

9)“The Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements”

10)PWC Canada Tax Summary

11)The Virtual Currency Regulation Review: Canada

13)Mining cryptocurrency

Last update: November 2024