MSTR Cat

Crypto Law/Level VIII · Around the world/8.1 The Americas/Lesson 2

Canada

How Canada regulates crypto through provincial securities law, federal anti-money-laundering rules and, from 2026, a federal stablecoin statute, and what the QuadrigaCX collapse taught its regulators.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Hold as an investor on capital account: the CRA includes only half of a capital gain in income. Catch: frequent, organised trading can be treated as business income, which is fully taxable, so keep records showing investment intent.
  2. Hold crypto exposure through exchange-listed funds inside a TFSA, where gains are tax-free; the 2026 TFSA dollar limit is $7,000 (CRA). Catch: coins themselves are not qualified investments, and income from a business carried on inside the TFSA is taxable.
  3. Realise losses deliberately: net capital losses can be carried back three years or forward indefinitely against taxable capital gains (CRA crypto guide). Catch: allowable capital losses offset only taxable capital gains, not salary or other income.
  4. Self-custody for your own account needs no registration; FINTRAC duties, including $10,000 large virtual currency transaction reports, fall on dealers. Catch: buy only through a platform on the CSA list of registered or undertaking firms, because FINTRAC registration alone is not securities approval.

MaterialsCSA Staff Notice 21-332 on pre-registration undertakings for crypto asset trading platforms (22 February 2023)FINTRAC’s guidance on money services businesses dealing in virtual currency and on large virtual currency transaction reportsThe Ontario Securities Commission staff report “QuadrigaCX: A Review by Staff of the Ontario Securities Commission” (June 2020)

Wonder

  1. Why are crypto platforms in Canada regulated by securities commissions when bitcoin itself is not a security?
  2. What changed for stablecoins when Parliament passed the Stablecoin Act in 2026?
  3. What happens to a Canadian’s coins if a platform’s founder dies or steals them?

Explore

  1. Canada has no single crypto statute. Securities law is provincial and territorial, so thirteen regulators act together through the Canadian Securities Administrators (CSA). Anti-money-laundering is federal, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, supervised by FINTRAC. Tax is federal and provincial, administered by the Canada Revenue Agency. In 2026 a fourth layer arrived: the Bank of Canada as supervisor of stablecoin issuers. A platform serving Canadians therefore deals with a securities regulator, FINTRAC and the tax authority at once, and in Quebec with the Autorité des marchés financiers rather than a commission elsewhere (compare the US two-layer model in lesson 8.1.1).
  2. The securities route is distinctive. CSA Staff Notice 21-327 explains that when a platform keeps custody of clients’ crypto and clients have only a contractual claim to it, the arrangement can be a security or derivative, a “crypto contract”, even when the coin itself is not a security. Joint CSA/IIROC Staff Notice 21-329 then set out how platforms register, as restricted dealers or investment dealers. While applications are pending, platforms may keep operating only after signing a pre-registration undertaking. CSA Staff Notice 21-332, published on 22 February 2023, made those undertakings stricter, so they behave like interim rules.
  3. The enhanced undertaking in Notice 21-332 requires client assets to be held separate from the platform’s own property, in trust for clients, with custodians that meet set standards. It bars margin, credit or other leverage for any client. It prohibits clients from buying or depositing value-referenced crypto assets, the CSA term for stablecoins, without the CSA’s prior written consent, and bars trades in crypto contracts based on the platform’s own proprietary tokens without consent. CSA Staff Notice 21-333, published on 5 October 2023, then set the terms on which platforms may offer value-referenced crypto assets. Before using a platform, its name can be checked on the CSA list of registered or undertaking firms.
  4. Stablecoins are moving to federal law. The Stablecoin Act, part of the Budget 2025 Implementation Act (Bill C-15), received royal assent on 26 March 2026 (S.C. 2026, c. 3). It makes the Bank of Canada the regulator of non-financial-institution issuers of fiat-referenced stablecoins. Issuers must register before operating, hold reserves in the reference currency worth at least the par value of outstanding coins, offer redemption at par and pay no interest or yield to holders. Federally regulated financial institutions are outside it. Its provisions were not yet in force in October 2026, and commentators expected that in 2027 once regulations are made; meanwhile the CSA terms still governed what platforms list.
  5. For anti-money-laundering purposes, dealing in virtual currencies makes a business a money services business. From 1 June 2020 such dealers had to register with FINTRAC, including foreign businesses without a place of business in Canada that direct services at people in Canada. From 1 June 2021 they must report large virtual currency transactions: receipts of the equivalent of $10,000 or more, in one transaction or in several within 24 hours, and follow travel-rule duties for transfers. Registration with FINTRAC is not approval by a securities regulator, and the two lists should be checked separately.
  6. The custody rules answer a real failure. On 11 June 2020 Ontario Securities Commission staff reported that QuadrigaCX collapsed because its co-founder and chief executive, Gerald Cotten, committed fraud; about 76,000 clients lost at least $169 million, most of it, about $115 million, through his unauthorised trading. On tax, the CRA treats gains as either business income or capital gains depending on the facts, and one half of a capital gain is included in income; the planned rise to two thirds was cancelled by the Prime Minister on 21 March 2025. Lesson 7.1.2 covers the comparable US loss rules.

Key facts

  • CSA Staff Notice 21-332 of 22 February 2023 requires crypto trading platforms operating under pre-registration undertakings to hold client assets in trust and to offer no margin or leverage.
  • The CSA uses the term value-referenced crypto assets for stablecoins, and Staff Notice 21-333 of 5 October 2023 set the terms for trading them on platforms.
  • Canada’s Stablecoin Act, enacted through Bill C-15, received royal assent on 26 March 2026 and makes the Bank of Canada the regulator of non-bank fiat-backed stablecoin issuers.
  • Dealers in virtual currency had to register with FINTRAC as money services businesses from 1 June 2020.
  • From 1 June 2021 FINTRAC-regulated businesses must report receipts of virtual currency worth $10,000 or more in a single transaction or within 24 hours.
  • An OSC staff report of 11 June 2020 found that QuadrigaCX clients lost at least $169 million because of fraud by its chief executive, Gerald Cotten.

Exercise nine, six, three, one

9CollectList up to 9 facts about how you or someone you know holds crypto in Canada (platform name, province, custody, stablecoins held, records kept…).
6ClusterSort them into 6 groups: securities registration, custody, stablecoins, FINTRAC duties, tax, and things you cannot yet answer.
3DistillReduce the 6 to 3: the points where the Canadian rules would protect you most, or where you would be least protected.
1CrystallizeWrite 1 sentence stating which Canadian regulator list you would check first for a platform you use, and why.

Fact check

Dates, figures and claims checked against the published sources listed below.

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