There is no crypto ban per se in Canada but new regulation is forcing many crypto exchanges to exit the market. In this post, I will examine which digital-asset exchanges have been banned in Canada and what the current regulatory status is for crypto.
After the collapse of FTX in 2023 Canadian Securities Administrators (CSA) implemented stricter rules to protect customers and their funds. The new guidance imposes limits on how much investors can invest, bans leverage trading, and restricts which stablecoins can be traded. See Canada Cryptocurrency Regulation for more.
How much can you invest in crypto in Canada?
There is a net buy limit of $30,000 across most provinces for retail investors. This means that after buying and selling crypto you can only own up to $30,000 worth of crypto in a given year. Provinces that are exempt from this rule are
- Manitoba
- Alberta
- Quebec
- British Columbia
Note that some of the larger crypto coins are exempt from this rule such as Bitcoin (see How to Buy Bitcoins in Canada), Bitcoin Cash, Ethereum, and Litecoin. The intent is to protect the assets of Canadian clients and make sure they don’t invest their life savings in meme coins
Is Crypto Legal in Canada?
Trading crypto is legal and taxable in Canada. To serve Canadian users centralized cryptocurrency trading platforms need to be registered as Money Service Businesses with Canadian securities regulators. However, crypto is not legal tender in the country i.e. the government cannot use it to pay wages or collect taxes in it.
Furthermore, Canada is still in the process of deciding what type of digital currency is considered a security. The key document to pay attention to here is something called CSA Staff Notice 46-308. According to this document, the following factors would help determine if a cryptocurrency is considered a security or not
- It did a pre-mine that distributed tokens to founders and investors before the token went public in an initial coin offering
- There is a central entity that manages the project and makes statements that indicate the coin will increase in value
- Management claims that the token will trade on crypto exchanges thus increasing hype about the coin.
While the OSC recognizes that digital assets such as Bitcoin, Ethereum, and the like are not securities, it says that companies that allow you to trade these assets would be subject to securities legislation.
How is cryptocurrency regulated in Canada?
In Canada, securities law isn’t governed by a single federal law. Each province has its own regulator with its own rules.
The CSA acts as an umbrella organization and helps coordinate these rules nationwide, including Quebec’s AMF and the Ontario Securities Commission. They typically follow CSA guidelines on crypto assets.
Which crypto trading platforms are banned in Canada?
The official CSA page lists the following crypto platforms as being banned in Canada:
- Catalyx digital assets exchange. Originally banned in Alberta but then other provinces followed
- KuCoin was originally banned by the Ontario Securities Commission and reciprocated in other provinces and territories
- Poloniex. It too was banned by the OSC and then other areas followed
- XT.com was Originally banned by the AMF and then other Canadian provinces followed
Unofficial sources such as Netcoin list the following additional exchanges
- Binance
- Bybit
- Gate.io
- OKX
- Bittrex Global
- Huobi Global
- Stablecoin issuer Paxos
- *MEXC
- *dYdX
*said to be still soliciting Canadian customers.
For a list of regulated exchanges see Which Crypto Platform Is Legal in Canada.
Why did cryptocurrency exchanges exit the Canadian market?
Apart from the exchanges that have been banned several cryptocurrency trading platforms have exited the market because the regulatory environment is unfavorable. The most notable of these is Binance whose CEO, Changpeng Zhao is now serving time in the United States. See Is Binance Legal in Canada.
Coinbase, the largest exchange in the country, claims that Canada is one of the most crypto-aware countries. The company is part of a lobby group to get Canadian authorities to make the country more crypto-friendly. Also see Is Coinbase Legit in Canada?
Is there a ban on decentralized finance platforms in Canada?
This is a grey area. There is nothing to prevent Canadian users from using decentralized exchanges as these do not require customers to verify their identity or share their personal information.
Canada pays close attention to what happens in the US where the Securities Exchange Commission is going after decentralized exchanges such as Uniswap.
I expect there will be a long drawn-out legal battle in the US before Canada takes a stance.
Is it safe to use a crypto exchange in Canada?
Yes, 17 exchanges in Canada are registered with Canadian regulators. You can find a list of the best Canadian Crypto exchanges here.
However please be aware that
- The crypto market is volatile. People do lose money. Check out my crypto course on how to avoid that.
- Your crypto assets are not insured by the Canada Deposit Insurance Corporation (CDIC) like your Canadian dollars at the bank are. If a centralized trading platform (CTP) goes bust no one can recover your funds for you.
- Market participants should avoid using unregistered CTPs and in particular you want to avoid margin trading.
- Scams and fraud are very common in crypto so make sure you browse my crypto basics to understand how it all works.
Also, see Why Can’t I Buy Crypto in Canada?
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