Canada has always led the way when it comes to the regulation and control of cryptocurrency. As far back as 2014, Canadian laws already recognized cryptocurrency and defined their use or influence in the economy.
Expectedly, as the crypto market continues to expand, regulators in Canada are on their toes to make adjustments to suit the times. Therefore, we must be constantly aware of the latest position of the law related to cryptocurrency in Canada, and that is what this article is about.
General Adoption of Cryptocurrency in Canada
Canada is not China, and so there is no ban on cryptocurrency. Instead, hundreds of individuals and companies engage daily in cryptocurrency and Web3 services. Furthermore, anyone can own or keep cryptocurrency; businesses may even accept it as payment.
However, despite this freedom, clearly defined rules, disclosure requirements, and regulations exist for entities that deal in cryptocurrency. For instance, if you want to trade cryptocurrency or advise on cryptocurrency, you must be registered with a securities regulator in your province. This is because Canada classifies cryptocurrencies as securities.
Are Cryptocurrencies Legal Tender in Canada in 2024?
No, they are not. Even though crypto is legal in Canada, it is not the country’s legal tender. Canada’s official legal tender is the Canadian Dollar, alongside the coins issued by the Royal Canadian Mint.
This distinction is crucial because it helps you know how to use cryptocurrency in Canada. For instance, you can make payments to private persons using cryptocurrency, but you cannot require or mandate a private person or company to accept a crypto payment from you – it is well within their rights to refuse.
What else can’t you do? You cannot make payments to the government via cryptocurrency. That means you cannot pay your taxes or other bills via cryptocurrencies. Note also that cryptocurrencies have less protection than Canadian dollars and coins because they are not legal tender.
Casinos and Cryptocurrency
Projections mention that the online gambling market in Canada will reach a revenue of $4.19 billion by 2024, which means it is a pretty sizable industry. Therefore, it is essential to examine online casino gambling and the use of cryptocurrency in that market.
So, can you make payments to casinos with cryptocurrency? Yes, you can. Canadian laws allow casinos to accept cryptocurrency as payment. Of course, adopting cryptocurrency has proved difficult for some casinos, while others have done it seamlessly. According to Techopedia, some casinos that have seamlessly imbibed cryptocurrency include Lucky Block and Mega Dice, and some of the commonly accepted coins are Bitcoin, Ethereum, Litecoin, and Tether.
Next, note that the regulatory laws guiding crypto and traditional gambling platforms are the same. The important thing is for such casinos to be appropriately licensed to operate within Canada, having submitted all necessary documents and paid all the required fees.
Taxing Cryptocurrencies in Canada
Even though you cannot pay taxes via cryptocurrency in Canada, you may pay taxes on income earned from cryptocurrency. The Canadian government views cryptocurrency as an investment. Therefore, the Income Tax Act and tax rules apply to them.
The implication is that you should report profits and losses made while trading or mining cryptocurrencies when filing your tax returns. Note that the taxes paid on cryptocurrency are paid either as capital gains tax or income tax, depending on each person’s scenario.
Lastly, in Canada, you don’t pay crypto taxes via cryptocurrency. Instead, the value is converted to dollars and paid in Canadian dollars. Taxpayers are allowed to decide their method for converting their cryptocurrency.
Regulatory Framework For Crypto Businesses in Canada
As stated earlier, entities that trade cryptocurrency or hold crypto assets on behalf of others must register with the relevant Canadian securities regulator in their jurisdiction; these entities will also have to disclose some information about how they operate. Some of these disclosures include a description of what they do, risks associated with their assets, measures put in place to prevent fraud and theft, third-party service providers they partner with, and proof of compliance with relevant global auditing and accounting standards.
Furthermore, issuers of cryptocurrency offerings are subject to an investment contract test that must be complied with. Failure to comply with these tests or any other regulatory laws could lead to punitive actions like fines or a ban from operating in the country. Also, to protect investor interests, crypto platforms must do a compulsory Know Your Customer (KYC) Verification for all individuals and businesses using such platforms.
Note also that crypto platforms must submit all cryptocurrency transfers exceeding ten thousand Canadian Dollars made within a 24-hour window to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Apart from protecting investors, this particular regulation also helps deal with money laundering.
Dealing With Money Laundering Via Cryptocurrency
Canada has an extensive framework to deal with money laundering activity that may happen through cryptocurrency thanks to the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLFTA). Regulators have classified cryptocurrency companies and platforms that deal in digital currencies among money service businesses (MSBs). In light of the classification, crypto companies must report suspicious transactions they observe, just like any other money service company.
Apart from reporting suspicious transactions, by classifying crypto companies as money service businesses (MSBs), regulators have ensured that crypto companies must register with FINTRAC and are responsible for ensuring thorough record keeping of the details of parties in every transaction.
Lastly, as MSBs, crypto companies must have a robust and precise Anti-Money Laundering (AML) compliance plan, which must be certified by an independent examiner.
It is clear from the foregoing that Canada has a robust, secure, and friendly regulatory approach in 2024. You can receive and make payments with cryptocurrency as an individual or business. Similarly, if you are a crypto company or platform, you are welcome in Canada if you follow all due regulations.