Canada -- 2026 Regulatory Updates Regulatory Overview

As of April 2026, cryptocurrency regulation in Canada continues to evolve, reflecting a multi-faceted approach involving securities regulators, anti-money laundering (AML) bodies, and prudential supervisors. The landscape aims to balance innovation with investor protection and financial stability.

Here's a breakdown of the key areas:

1. CSA Restricted Dealer Registration Requirements

The Canadian Securities Administrators (CSA), an umbrella organization for provincial and territorial securities regulators, has taken the lead in regulating crypto asset trading platforms (CTPs). Most crypto assets or contracts involving them are considered securities or derivatives under Canadian law, bringing CTPs under securities regulation.

Current Approach (as of April 2026):

• Registration Requirement: CTPs operating in Canada must be registered with the relevant provincial or territorial securities commissions. The most common form of registration for new or expanding platforms has been as an investment dealer (or restricted dealer) and a member of the Canadian Investment Regulatory Organization (CIRO, formerly IIROC).
• Restricted Dealer Category: Many platforms initially operate under "interim terms and conditions" or "restricted dealer" registrations, granted through exemptive relief orders. These orders allow them to operate while working towards full compliance with securities legislation, including requirements from National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations and National Instrument 21-101 Marketplace Operation.
• Key Requirements for Registered Platforms: These typically include:
  • Segregation of Client Assets: Client crypto assets must be held in trust, separate from the platform's proprietary assets.
  • Custody: Use of qualified custodians, often involving robust cold storage solutions.
  • Insurance: Appropriate insurance coverage.
  • Robust Systems and Controls: Strong cybersecurity, operational resilience, and risk management.
  • Know-Your-Client (KYC) and Suitability: Comprehensive identity verification, suitability assessments for certain products, and risk disclosures.
  • Financial Resources: Adequate capital to operate and manage risks.
  • Marketplace Operation: Compliance with rules for fair access, transparency, and market integrity if operating as a marketplace.
• Path to Full Registration: While interim orders are common, the CSA's long-term goal is for platforms to achieve full registration and meet the higher standards required of traditional investment dealers and marketplaces.

Source:

• CSA Staff Notice 21-332 – Crypto Asset Trading Platforms: Custody and Implications for the Segregation of Client Assets: https://www.osc.ca/en/securities-law/instruments-rules-policies/2/21-332/csa-staff-notice-21-332-crypto-asset-trading-platforms-custody-and-implications-segregation-client
• CSA Staff Notice 21-333 – Crypto Asset Trading Platforms: Terms and Conditions for Registration: https://www.osc.ca/en/securities-law/instruments-rules-policies/2/21-333/csa-staff-notice-21-333-crypto-asset-trading-platforms-terms-and-conditions
• National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations: https://www.osc.ca/en/securities-law/instruments-rules-policies/3/31-103/ni-31-103-registration-requirements-exemptions-and-ongoing-registrant-obligations

2. FINTRAC VASP Registration and Travel Rule

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada's financial intelligence unit, responsible for administering the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

VASP Registration (as of April 2026):

• Requirement: Entities dealing in virtual currency are categorized as money service businesses (MSBs) or foreign money service businesses (FMSBs) under the PCMLTFA. This means any person or entity operating in Canada that offers services of virtual currency exchange or transfer, and meets certain thresholds, must register with FINTRAC as a "Virtual Asset Service Provider" (VASP).
• Obligations: Registered VASPs are subject to a range of compliance obligations, including:
  • Registration: Registering with FINTRAC.
  • Record Keeping: Maintaining records of transactions, client identification, and compliance reports.
  • Client Identification: Verifying the identity of clients.
  • Reporting: Reporting suspicious transactions, large cash transactions ($10,000 CAD or more), and electronic funds transfers ($10,000 CAD or more).
  • Compliance Program: Developing and implementing a comprehensive compliance program, including risk assessments, policies and procedures, and ongoing training.

Travel Rule (as of April 2026):

• Implementation: The "Travel Rule," based on Financial Action Task Force (FATF) Recommendation 16, officially came into force in Canada with amendments to the PCMLTFA in June 2021.
• What it entails: It requires VASPs (like other financial institutions) to obtain, hold, and transmit specific originator and beneficiary information with transfers of virtual currency (similar to wire transfers). For transactions equal to or greater than $1,000 CAD, VASPs must:
  • Obtain Information: Collect names, addresses, and account numbers (or unique transaction identifiers) for both the sender (originator) and receiver (beneficiary).
  • Send Information: Transmit this information to the beneficiary institution.
  • Receive Information: Receive this information from the originator institution.
• Current Status: As of April 2026, the Travel Rule is fully in force, and FINTRAC expects compliance. While practical interoperability solutions among VASPs for seamless data exchange continue to evolve globally, Canadian VASPs are required to implement reasonable measures to comply with the information collection and transmission requirements.

Source:

• FINTRAC – Guidance on virtual currency: https://fintrac-canafe.canada.ca/guidance-directives/compliance-conformite/guide/vc-mv-eng
• FINTRAC – Virtual currency business: https://fintrac-canafe.canada.ca/reporting-declaration/info/vc-mv-eng
• PCMLTFA – Regulations Amending the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations: https://laws-lois.justice.gc.ca/eng/regulations/SOR-2020-101/index.html (Key amendments came into force June 2021)

3. OSFI Crypto Asset Exposure Rules for Banks

The Office of the Superintendent of Financial Institutions (OSFI) is the primary prudential regulator of federally regulated financial institutions (FRFIs), including banks. OSFI aims to ensure the safety and soundness of these institutions.

Current Stance (as of April 2026):

• Alignment with Basel Committee: OSFI is closely aligning its approach with the international framework developed by the Basel Committee on Banking Supervision (BCBS) for the prudential treatment of crypto-asset exposures. This framework categorizes crypto assets into two main groups:
  • Group 1 Crypto Assets: Tokenized traditional assets and stablecoins that meet certain conditions (e.g., effective stabilization mechanism, robust redemption rights). These generally receive capital treatment similar to the underlying traditional asset.
  • Group 2 Crypto Assets: All other crypto assets, including unbacked cryptocurrencies (like Bitcoin and Ether). These are subject to a conservative capital treatment, often requiring a 1,250% risk weight, effectively meaning a bank must hold capital equal to the value of its exposure.
• OSFI Guidelines: OSFI has been in the process of developing and implementing its own guideline to incorporate the BCBS framework into Canada's capital requirements for banks.
  • Previous Consultations: OSFI has issued draft guidance (e.g., related to Guideline B-10: Interest Rate Risk Management and consultations on capital requirements for crypto exposures).
  • Expected Implementation: As of April 2026, OSFI's final guidance on capital and liquidity requirements for crypto asset exposures for FRFIs is expected to be either fully implemented or nearing full implementation, building on the BCBS's finalized standards from late 2022. This typically involves incorporating the framework into their capital adequacy requirements (e.g., Guideline B-20 or changes to the capital adequacy requirements for banks).

Source:

• Basel Committee on Banking Supervision – Prudential treatment of cryptoasset exposures: https://www.bis.org/publ/bcbs_d559.htm (This is the international standard OSFI is aligning with)
• OSFI – Information on Consultations and Publications: OSFI's official website for past consultations on crypto assets and related guidelines. Specific final guideline URLs would be available on OSFI's website once published, likely within the Capital Adequacy Requirements (CAR) or Guideline B-10 sections. For current status, one would check for the latest versions of their guidelines. Example of a related consultation: https://www.osfi-bsif.gc.ca/Eng/fi-if/rg-lr/cr-rc/cr-rc-pilar/car-lc/Pages/car24-ch1-2_e.aspx (This links to Capital Adequacy Requirements - specific guidance on crypto assets is integrated into these broader frameworks).

4. Recent Enforcement by Provincial Securities Commissions

Provincial securities commissions, particularly the Ontario Securities Commission (OSC), British Columbia Securities Commission (BCSC), and Autorité des marchés financiers (AMF) in Quebec, have been active in enforcing securities laws against unregistered or non-compliant crypto platforms.

Examples of Enforcement Actions (leading up to April 2026):

• Ongoing Focus on Unregistered Platforms: Securities regulators continue to target platforms operating in Canada without registration. This often results in cease trading orders, financial penalties, and requirements for platforms to either register or exit the Canadian market.
• Settlements and Undertakings: Many international crypto trading platforms that previously operated without registration have entered into settlement agreements or provided "undertakings" to provincial commissions. These typically involve:
  • Ceasing operations for Canadian residents unless registered.
  • Providing investor compensation or making payments for regulatory costs.
  • Committing to a registration process if they wish to re-enter the Canadian market compliantly.
• Examples of such actions have included:
  • Bybit: In March 2023, the OSC reached a settlement with Bybit, requiring the platform to pay $2,468,982 and provide an undertaking that it would not operate in Ontario without registration. Source: https://www.osc.ca/en/news-events/news-releases/osc-reaches-settlement-bybit
  • KuCoin: In June 2022, the OSC obtained orders against KuCoin (Mechbit Technology Ltd.) permanently banning it from participating in Ontario's capital markets and requiring it to pay an administrative penalty of $1,650,000 and $99,754 for costs. Source: https://www.osc.ca/en/news-events/news-releases/osc-obtains-orders-against-kucoin-permanently-banning-it-ontario-capital-markets
  • Binance: Following a pattern of non-compliance, Binance entered into an undertaking with the OSC in December 2022 to cease all operations in Ontario. Later, in May 2023, the AMF imposed an administrative monetary penalty of $2.25 million on Binance for operating an unregistered platform and offered non-compliant derivatives in Quebec. Source (OSC): https://www.osc.ca/en/news-events/news-releases/osc-takes-action-against-binance Source (AMF): https://lautorite.qc.ca/en/press-room/news-releases/news-release-details/the-amf-imposes-2.25-million-administrative-monetary-penalty-on-binance-for-operating-an-unregistered-platform

These enforcement actions underscore the regulators' commitment to ensuring that crypto asset trading platforms comply with Canadian securities laws or face significant penalties and removal from the market.