Canada

## Retail Cryptocurrency Trading Status in Canada

**Report Date:** 2025-06-26

**Topic:** Retail_Trading_Status

**Description:** An assessment of whether individual citizens and residents in Canada are legally permitted to buy, sell, and hold cryptocurrencies, detailing the regulatory environment surrounding this activity.

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### **Retail_Trading_Status: Canada**

**Identified Status:** Allowed-Regulated

**Detailed Narrative Explanation:**

Retail cryptocurrency trading is legally permitted in Canada. However, it is subject to a robust and evolving regulatory framework primarily overseen by provincial securities regulators, coordinated through the Canadian Securities Administrators (CSA), and also involving federal anti-money laundering and anti-terrorist financing (AML/ATF) obligations enforced by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

Historically, Canada's approach to crypto assets has been cautious but generally permissive, recognizing their innovative potential while seeking to mitigate risks to investors and the financial system. Early regulatory efforts focused on applying existing securities laws to crypto assets that were deemed to be securities or derivatives.

A significant development has been the implementation of a specific regulatory regime for crypto-asset trading platforms (CTPs). In March 2021, the CSA and the Investment Industry Regulatory Organization of Canada (IIROC), now part of the New Self-Regulatory Organization of Canada (New SRO), jointly issued Staff Notice 21-329 *Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements*. This notice clarified that platforms facilitating the trading of crypto assets that are securities or derivatives must comply with existing securities legislation. It also signaled an intention to bring CTPs that trade non-security crypto assets under a regulatory umbrella.

Subsequently, the CSA introduced a pre-registration undertaking (PRU) system for CTPs. This framework requires platforms operating in Canada, including those dealing with crypto assets that are not necessarily securities, to register with provincial securities regulators and adhere to terms and conditions designed to protect investors. These conditions often include requirements related to custody of assets, know-your-client (KYC) procedures, risk disclosure, capital requirements, and insurance. The CSA has emphasized that these interim measures are in place while a more permanent regulatory framework is developed.

In February 2023, the CSA significantly enhanced its expectations for CTPs operating under the PRU regime. CSA Staff Notice 21-332 *Crypto Asset Trading Platforms: Pre-Registration Undertakings – Changes to Enhance Canadian Investor Protection* outlined stricter requirements. These include commitments from CTPs to segregate client assets from their own, not to pledge, re-hypothecate or otherwise use client assets, and to refrain from offering margin or leverage for any crypto asset to Canadian clients. Furthermore, platforms are generally prohibited from allowing clients to buy or deposit "Value Referenced Crypto Assets" (commonly known as stablecoins) without prior written consent from the CSA.

From an AML/ATF perspective, entities dealing in virtual currencies, including exchanges and platforms facilitating their transfer, are considered Money Services Businesses (MSBs) or Foreign Money Services Businesses (FMSBs) under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). As such, they are required to register with FINTRAC, implement a comprehensive compliance program, conduct KYC checks, report certain types of transactions (e.g., large virtual currency transactions of CAD 10,000 or more), and keep specific records. These obligations have been progressively strengthened over recent years.

Therefore, while Canadians are free to buy, sell, and hold cryptocurrencies, the platforms and intermediaries they use are increasingly subject to specific regulations aimed at investor protection and maintaining market integrity, as well as stringent AML/ATF controls. The regulatory landscape continues to evolve, with a clear trend towards greater oversight and integration of crypto-asset activities within the broader Canadian financial regulatory framework.

**Relevant Text Excerpts and Sources:**

1.  **Canadian Securities Administrators (CSA) - General Approach & Pre-Registration Undertakings:**
    *   **Excerpt (Summary):** The CSA has stated that crypto trading platforms (CTPs) that are not yet registered but continue to operate in Canada while pursuing registration are expected to provide a pre-registration undertaking (PRU) to their principal regulator. This undertaking includes terms and conditions consistent with investor protection and regulatory requirements, such as custody and segregation of assets, maintaining adequate capital, and providing transparent risk disclosures. The CSA has also indicated that platforms dealing in crypto contracts (where the underlying asset is a crypto asset) are subject to securities legislation.
    *   **Source:** Canadian Securities Administrators (CSA) - Various Staff Notices and News Releases.
    *   **URL:** (General CSA crypto-asset page) `https://www.securities-administrators.ca/cryptocurrency-resources/` (Specific notices like 21-329 and 21-332 would be found through this portal or direct search on the CSA website).

2.  **CSA Staff Notice 21-332 *Crypto Asset Trading Platforms: Pre-Registration Undertakings – Changes to Enhance Canadian Investor Protection* (February 22, 2023):**
    *   **Excerpt (Summary):** This notice outlines enhanced expectations for CTPs operating under PRUs. Key commitments include: enhanced requirements for custody and segregation of client assets, a prohibition on offering margin or leverage on crypto assets to Canadian clients, and restrictions on the trading of Value Referenced Crypto Assets (stablecoins) without CSA consent. The notice emphasizes the CSA's commitment to investor protection pending the development of a comprehensive regulatory framework for CTPs.
    *   **Source:** Canadian Securities Administrators.
    *   **URL:** `https://www.osc.ca/en/securities-law/instruments-rules-policies/2/21-332/csa-staff-notice-21-332-crypto-asset-trading-platforms-pre-registration-undertakings-changes` (Note: This link is to the Ontario Securities Commission, a key member of the CSA, which publishes CSA notices).

3.  **Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) - AML/ATF Obligations:**
    *   **Excerpt (Summary):** Businesses dealing in virtual currencies are considered Money Services Businesses (MSBs) or Foreign Money Services Businesses (FMSBs) and must register with FINTRAC. They have obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), including implementing a compliance program, know-your-client (KYC) requirements, reporting large virtual currency transactions (equivalent to CAD 10,000 or more), and record-keeping.
    *   **Source:** Financial Transactions and Reports Analysis Centre of Canada.
    *   **URL:** `https://fintrac-canafe.canada.ca/virtual-currency-monnaie-virtuelle/overview-apercu-eng`

4.  **Government of Canada - General Stance on Cryptocurrencies:**
    *   **Excerpt (Summary):** The Government of Canada acknowledges that cryptocurrencies are not legal tender in Canada but can be used to buy goods and services or held as an investment. It advises Canadians to learn about the risks associated with cryptocurrencies. The Bank of Canada, the federal government, and other authorities continue to monitor developments in the crypto-asset space.
    *   **Source:** Financial Consumer Agency of Canada (FCAC), a Government of Canada body.
    *   **URL:** `https://www.canada.ca/en/financial-consumer-agency/services/payment/digital-currency.html`

This report reflects the status of retail cryptocurrency trading in Canada as of the indicated date, based on publicly available information from regulatory bodies and government sources. The regulatory landscape for crypto assets is dynamic and subject to ongoing development.