Canada Puts Tax Pressure on Crypto Instead of Criminal Cases

Canada puts tax pressure on crypto instead of criminal cases, while CRA and FINTRAC collect hundreds of millions of dollars from crypto businesses, investigations with a digital asset component have not led to charges for years. In particular, Canada Revenue Agency, through a specialized team of cryptoasset auditors, has over the past three years turned the crypto market into a stable source of tax revenues, processing more than 200 files and securing over $100 million in additional taxes. At the same time, according to the agency's estimates, up to 40 percent of taxpayers who use cryptoasset platforms either did not file returns or fall into the high-risk group for non-compliance. However, since 2020, not a single case involving digital assets has reached the indictment stage, which highlights the gap between fiscal pressure and criminal enforcement.

Get our comprehensive breakdown about Best Yield Farming Platforms 2025: Top DeFi Picks for Passive Income

Stack 10% More on Your First BTCC Deposit

Start Trading

How CRA and FINTRAC Put Pressure on Crypto Through Audits and Fines

In court, CRA describes a growing layer of an anonymous underground economy in which cryptocurrencies and non-fungible tokens are used for tax evasion. Through the unnamed person's requirement mechanism, the agency secures disclosure of client data from crypto platforms. In the case against Dapper Labs Inc., a leading company in the NFT segment, the regulator initially requested information on approximately 18,000 users, but after negotiations, it narrowed the request to 2,500 clients. The affidavit by Predrag Mizdrak, a project leader in digital compliance and audit support, records that about 15% of Canadians who use crypto platforms did not file returns on time or at all, and among those who did file, about 30 percent are classified as high risk for non-compliance.

"The use of cryptoassets greatly expanded during the COVID-19 pandemic. This has created additional compliance challenges for the CRA due to the built-in anonymity within the crypto space, the volume of transactions, and the ease of setting up accounts on many cryptoasset platforms across borders."

At the same time, in the AML, FINTRAC is increasing pressure on crypto businesses for violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. In October, the agency announced a record fine of nearly $177 million for Xeltov Enterprises Ltd., registered as a Vancouver mailbox rental business, and more than $19.5 million for Seychelles-based Peken Global Ltd., the operator of KuCoin, for failing to register as a foreign money services business. Both companies have no employees or operations in Canada but are challenging the sanctions in Federal Court, which demonstrates FINTRAC's attempt to extend its requirements to non-resident services that work with Canadian clients.

Get our comprehensive breakdown about the Top Web3 dApps: What Are They and How Do You Choose a dApp?

Why Criminal Cases on Crypto Gaps Remain on Pause

At the same time, criminal enforcement is lagging. CRA reports that since 2020 it has initiated five criminal investigations with a digital asset component, but no charges have yet been brought in any of the cases. The agency emphasizes that complex financial investigations take years and depend on the number of subjects, international requests, and the level of cooperation from witnesses.

"The CRA's criminal investigations are complex and often require years to complete."

Jessica Davis, head of Insight Threat Intelligence and a former employee of FINTRAC and the Canadian Security Intelligence Service, considers the $100 million collected as a result of crypto audits a pretty significant haul, but points out that the regime has not yet shown a comparable number of criminal cases. According to her, many investors still do not view profits from crypto as taxable income, and the key issue lies in the ability to sustain long-term investigations and have them result in charges with the limited resources of the RCMP and other agencies.

"Where we have more trouble is on the enforcement side of things. So, actually sustaining financial crimes investigations, actually bringing those charges and demonstrating the effectiveness of our regime."

At the same time, the federal government has been discussing the creation of a Canadian financial crimes agency for several years, but only in the current budget has it formalized a plan to launch the new body by spring 2026. Finance Minister Francois-Philippe Champagne states that the agency will handle complex cases of money laundering, organized criminal activity, and online financial scams, and the Department of Finance Canada describes it as the country's first specialized organization for investigating complex financial crimes and recovering criminal proceeds.

"The agency will be 'Canada's first-ever organization dedicated to investigating sophisticated financial crimes and recovering illicit proceeds from criminals.'"

At the same time, Davis recalls that similar initiatives have already appeared in different budgets and different iterations, so she remains cautiously optimistic and suggests waiting for concrete steps before judging the impact of the new body on enforcement related to digital assets.

Stack 10% More on Your First BTCC Deposit

Start Trading

Conclusion

The current configuration of Canadian policy toward the crypto market is rather interesting and combines an aggressive tax and AML approach with a limited willingness to pursue long and expensive criminal cases. CRA is scaling up cryptoasset audits, using unnamed persons' requirements against clients of major platforms and signaling to users that the risk of reassessments and compelled data disclosure has become the norm, while FINTRAC is imposing record fines even on non-resident services. However, the absence of charges in cases with a digital asset component and the acknowledged shortage of resources for financial investigations keep enforcement in a transitional phase.

Thus, in Canada, the key risks remain tax and regulatory claims, and the scale of criminal practice will depend on how far the Canadian financial crimes agency actually strengthens the state's ability to investigate complex schemes involving crypto assets and have them result in court decisions. Get more insights from our guides for beginners and professionals, and stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain developments!