Crypto in Canada
This blog post will cover:
- Is crypto legal in Canada?
- Crypto taxes in Canada
- Crypto usage in Canada
- The future of crypto in Canada
Despite the fact that Canada has seen numerous successful crypto projects emerge from within its borders – such as Binance (BNB), which was started by Canadian entrepreneur Changpeng Zhao – it's also a country that has been trying to enforce stricter crypto regulations than the rest of the world.
This goes all the way back to 2014, when Canada became the first nation to explicitly address cryptocurrencies in the “Proceeds of Crime and Terrorist Financing Act” as a threat that make money-laundering and financing illegal activities easier. So how’s it going with crypto assets in this location? Let’s figure it out.
Is crypto legal in Canada?
Cryptocurrencies are officially categorized as commodities in Canada. Canada does not have a federal or central financial regulator authority. Each province is rather granted the right to make their own regulations. This on one hand has created a kind of a rivalry between provinces to create a more welcoming environment for these new financial technologies and attract more investment. On the other hand, this also means that things can get very complicated quickly if a company, its users, its partner companies, or its employees are based in different provinces within Canada. This means that the so-called “gray zone” that is usually prevalent in all countries’ legislations when it comes to crypto is much, much bigger when it comes to Canada.
The official classification of crypto related activities usually depends on multiple factors, such as the frequency of the transactions or the amount of money involved. All this being said however, this is a big headache mostly for big players only. The ordinary crypto investor can get away just fine if he declares his crypto holdings and pays taxes on the same regularly.
Crypto taxes in Canada
While the exact tax regulations may again differ by province, the way cryptocurrencies are taxed are mostly the same in Canada. Taxable income is generated when selling the coins. The only exception from this is mining crypto, which is taxed separately.
So, if you mine crypto in Canada that you eventually sell, you will be taxed two times. This already creates a less welcoming environment for miners compared to many other countries, where liabilities only occur after selling crypto. The basis of any tax you might incur dealing with cryptocurrency is usually the profit you have made, while the tax percentage mainly depends on whether these profits are categorized as capital gains or business income, which again, might vary between different provinces.
Crypto usage in Canada
According to data presented by The Bank of Canada, almost 15 percent of Canadian citizens own cryptocurrency. Hence despite the negative view of authorities, cryptocurrencies are quite popular amongst Canadians. As a result of this, there are currently more than 2600 Bitcoin ATMs in Canada. The largest city, Toronto has around 900 ATMs for a population of roughly 5,6 million people. That is 6200 people per crypto ATMs, which is more dense than people per regular automated terminal in many developing countries.
Some retailers, such as “HGregoire” (a car retailer) or “Park and Finch” (eyewear online shop) do accept cryptocurrencies like BTC and BCD, but the adaptation of real-life crypto transactions remains marginally low, similarly to other countries. Most crypto adoption is still limited to online space.
The future of crypto in Canada
Canada continues to be an important tech and finance center and hence a relevant crypto hub as well, but unfortunately this is not due to any intent of the government or favorable regulations. This is the sole product of the incredibly well developed and wealthy economy of the country. The area in crypto that has the most unused potential in Canada is without question eco-friendly crypto mining. Canada has a booming renewables economy and a booming oil and gas industry. Low-profile gas discoveries that are not suitable for large scale extraction can be used by mobile crypto mining rigs to mine crypto using essentially free energy, as these locations are usually sold for pennies by big corporations, because simply abandoning them can be very costly due to environmental regulations.
Although Canada has been home to several major crypto projects, the country’s regulations are not particularly in favor of crypto. It is rather its sheer economic potential that is producing these successful projects. At the same time, Canada has enormous potential in terms of crypto mining operations using green energy and alternative energy sources.
Looking for more related articles about crypto regulation? Check out our latest post about Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, Vietnam, USA, Switzerland, Portugal, Finland, Japan, Philippines and Iceland!