What are the rules of investing in crypto in Canada?
As cryptocurrencies become more popular, it’s important to make sure you understand the rules of investing in them.
We’ve put together this list to explain what regulations apply to Canadian investors trying to get into this market.
Canadian crypto regulations can sometimes be confusing
It can be difficult to understand all of the regulations surrounding cryptocurrency. Cryptocurrency regulations are changing rapidly and vary by province, so it is important to do your research before investing in any cryptocurrency. However, according to Tezro, there are plenty of crypto wallets authorized to operate in Canada.
Here’s everything you need to know about Canadian crypto regulations:
1. Initial Coin Offerings (ICOs) are banned
The Canadian Securities Administrators (CSA), a group representing provincial and territorial securities regulators, has issued a bulletin on ICOs that includes “investor alerts” warning that they may be subject to securities regulation. So, make sure to keep that in mind if you’re looking to get your hands on new coins.
2. Securities need to be registered with the provincial governments
You need to be aware of the provincial securities laws if you’re going to invest in crypto, as they vary by province. In Canada, crypto tokens are subject to securities laws, including registration requirements.
Therefore, if you want to purchase a token that is considered a security (such as those offered through an ICO), it must be registered with your provincial government before investors can buy it.
Each province has its own securities law and regulations; therefore, it’s important for Canadian investors to know how their particular province treats crypto assets before they make any investment decisions.
3. Know your provincial regulators.
The regulations for investing in cryptocurrencies vary from province to province. Currently, each of the following Canadian provinces has a securities regulator: British Columbia Securities Commission (BCSC), Ontario Securities Commission (OSC), Security Exchange Commission (SEC), Manitoba Securities Commission (MSC), New Brunswick Securities Commission (NBSC), Nova Scotia Securities Commission (NSSC) and Prince Edward Island Securities Office.
In order to understand what these regulators require when it comes to cryptocurrency investments, look at their websites for more information on how they view different types of cryptocurrencies as well as rules for trading them in your area.
4. The Canada Revenue Agency considers cryptocurrency taxable income.
If you’re investing in crypto in Canada, keep in mind that the Canada Revenue Agency (CRA) considers cryptocurrency to be a commodity. And this means that transactions involving commodities are subject to the GST/HST.
This means that you may have to pay GST/HST on any crypto-related purchases such as buying tokens from an exchange or paying for your Ethereum transaction fees. These rules also apply when you purchase items used for mining purposes.
And, if you’ve made a profit on crypto trading, then you have to pay taxes on it i.e. your income from cryptocurrencies exceeds $10k CAD at some point during the financial year.
5. You can deduct crypto expenses when you file your taxes.
You can deduct expenses and losses from trading when you file your taxes. Similarly, cryptocurrency trading and mining are viewed as a business activity by the CRA and you will be able to deduct expenses from it as well.
Finally, if you’re investing in cryptocurrencies, then they’re treated like stocks and other securities — you can deduct the costs associated with buying them (commissions) or selling them (transaction fees).
The rules regarding cryptocurrencies are complicated, and they vary between provinces. In British Columbia, for example, you need to be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) before you can invest in crypto.
You might also have to report all your trades to the government—no matter how small or large they are!