Canada Crypto License
Before 2018, there was no unified regulatory framework for companies dealing with cryptocurrencies in Canada. This lack of clarity made investors and other market players hesitant to cooperate with local crypto ventures and anticipate the new effective legal solution. That changed with the adoption of several legal acts aimed at bringing transparency and structure to the evolving crypto ecosystem in the country.
As of today, both Canadian and international businesses that deal with crypto assets or digital currencies are recognized as Money Services Businesses (MSBs). With the introduction of this classification, crypto-related companies are required to register as MSBs with FINTRAC and comply with anti-money laundering (AML) and counter-terrorist financing (CTF) laws before they can operate lawfully in Canada.
Contents
- What Is the Canadian MSB License?
- Benefits of Obtaining a Crypto License in Canada
- Why Should You Choose Fintech Harbor Consulting to Receive Digital Finance Authorization in Canada?
- Requirements for Crypto License in Canada
- The Process of Obtaining a Crypto License in Canada
- Crypto Regulation in Canada
What Is the Canadian MSB License?
In order to operate lawfully in Canada, it’s essential to comply with the regulatory requirements of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). This government agency is in charge of the MSBs registration in the country, oversees the businesses’ compliance with Canadian legislation, and aims to prevent money laundering and terrorist financing activities. If you are looking to launch a company in this country, you will have to register your venture as an MSB through FINTRAC and obtain appropriate authorization (commonly referred to as the Canada cryptocurrency exchange license). To determine whether your business qualifies as an MSB, here is a list of financial activities that require authorization:
- Provision of payment services;
- Foreign exchange dealing;
- Dealing in virtual currency;
- Crowdfunding platform;
- Money transferring;
- Issuing or redeeming money orders.
If your venture performs any of these services, know that you need to get an official authorization, MSB license, from FINTRAC to continue operating legally in the jurisdiction. Due to its favorable regulatory framework, clear compliance obligations, possibility of 100% remote company formation, and well-established licensing process, Canada is a perfect destination for securing your lawful financial services.
RPAA Regulation and PSP Services
Payment services in Canada are regulated under the Retail Payment Activities Act (RPAA). This framework was designed to enhance the security of the payment systems across the country. The RPAA applies to MSBs that act as Payment Service Providers (PSPs) and identifies rules to protect customers and reduce operational and financial risks. Since November 2024, crypto businesses must register with the Bank of Canada no less than 60 days before starting their PSP operations based in Canada. Besides, they are required to follow the risk management protocols in order to protect the customers’ funds and ensure safe transactions.
As you plan to obtain your MSB license there, you can expect clear regulatory requirements and a transparent process. Our legal professionals will provide you with full support at every step of the application process, as well as ongoing assistance with your company’s compliance even after you get your MSB license.
Permitted Activities With an MSB License in Canada
When registering a company in Canada, it is mandatory to obtain an MSB license from the state regulator to lawfully carry out the following activities:
- Foreign exchange dealing: Exchange between fiat currencies (e.g., exchange of Pound Sterling for US dollar);
- Money transferring: Remitting or transmitting funds by any means or through any person, entity, or electronic funds transfer network;
- Issuing or redeeming money orders: Issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments;
- Crowdfunding platform: Services that provide and maintain crowdfunding services “for use by other persons or entities to raise funds or virtual currency for themselves or for persons or entities specified by them. However, keep in mind that crowdfunding platforms may have additional regulatory obligations under Canadian securities laws;
- Dealing in virtual currency: Exchanges between fiat and virtual currencies, and virtual currencies to each other (e.g., exchanging BTC for US dollars);
- Payment service provider: A person or entity facilitates transactions by intermediating payment instructions between buyers and sellers of goods or services. For example, a platform that allows businesses to accept electronic payments.
Note: For certain PSP activities, especially those that involve facilitating fiat payments between third parties, the Retail Payment Activities Act (RPAA) will impose additional registration and compliance obligations with the Bank of Canada, once it comes fully into force. In these cases, MSB registration with FINTRAC is necessary but may not be sufficient. Businesses operating as PSPs should assess whether they are also subject to RPAA requirements.
Benefits of Obtaining a Crypto License in Canada
If you consider applying for the Canadian MSB license, here is a range of benefits to expect in this jurisdiction:
- Canada allows you to form your company and receive your receipt of MSB registration entirely remotely. This provides remarkable flexibility as you plan to expand your business in the fast-growing market in this jurisdiction. Yet, while the company formation is 100% remote and you don’t need any local substance, you will still have to appoint a compliance officer and register your venture at a Canadian address for correspondence;
- Another great benefit you get with your MSB license is that the company registration is issued for an unlimited period of time, with a requirement to renew your registration every two years;
- Due to the transparent and effective regulatory framework in Canada, obtaining your MSB license there provides a solid foundation for expanding your company into the global market. The financial supervisor in this jurisdiction is FINTRAC, which aims to combat money laundering, sanctions evasion, terrorist activity financing, and threats to the country’s security;
- Canada’s established regulatory process offers predictability and transparency, although actual registration timelines can vary depending on the complexity of the application and the applicant’s business structure;
- Finally, with an MSB license in Canada, your company becomes fully authorized to provide a wide range of services, varying from foreign exchange dealing and money transferring to issuing money orders and dealing in virtual currencies.
Why Should You Choose Fintech Harbor Consulting to Receive Digital Finance Authorization in Canada?
The process of registration involves several important steps and requires close attention to every detail. Even though the Canadian licensing process is considered one of the most transparent and streamlined ones, we acknowledge the complexities of preparing all the necessary documentation, ensuring full compliance, and proceeding with all the ongoing checks. Therefore, our expert team of legal professionals is here to assist you through every stage of your Canadian licensing journey, so make it as smooth and quick as possible.
Here is what you get as you partner with us to secure your crypto license in Canada:
- Comprehensive advice and consulting to make an informed decision about your MSB registration in Canada;
- Full support with registering your company in British Columbia;
- Assistance with your MSB registration with FINTRAC in full compliance with the applicable legislation;
- Development of required policies and manuals for registration;
- Assistance with preparing the complete set of documents for your successful application process;
- All conditions are officially spelled out in the contract;
- Detailed calculation and no hidden fees;
- Simple and clear terms of cooperation;
- Complete confidentiality of your project;
- Full consulting support after certification as a crypto provider.
Requirements for Crypto License in Canada
Company Registration
There are 2 levels of company incorporation in Canada. Those are the federal – Canada-wide – level and the provincial level for each of the 10 Canadian provinces. Due to its flexible and streamlined requirements, the most popular province for company registration is British Columbia (BC). What makes it so attractive to business operators is that it does not require a local director in this province to launch your company there.
A limited liability company (LLC) remains the most common option for both local and foreign investors looking to get the MSB registration (commonly referred to as a Canada crypto exchange license) at the federal or regional level.
Directors and Shareholders
In order to incorporate your venture in BC, you need to appoint at least 1 director and 1 shareholder. They can be the same person if required. There are no residency requirements for the director and shareholder of a BC company. Moreover, all directors and shareholders may be located outside of Canada if required.
Compliance Officer
To obtain MSB registration in Canada, your company must designate a compliance officer in addition to meeting basic requirements for directors and shareholders. A single individual can serve as director, shareholder, and compliance officer if needed.
The compliance officer does not need to be a Canadian citizen or resident, but must have sufficient authority and knowledge to implement and maintain an effective compliance program.
According to FINTRAC’s website, the compliance officer should:
- Have the authority and resources to implement changes and oversee the compliance program;
- Be familiar with the company’s operations and structure;
- Understand money laundering and terrorist financing risks relevant to the business.
Experience in compliance is recommended, although not strictly required. Expertise in virtual assets is not mandatory.
Required Documents
To obtain your Canadian MSB registration, you will generally need to provide the following documentation and information:
- Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) compliance programs;
- Identification documents for directors, shareholders, and the compliance officer;
- Professional background, such as a resume (CV) or biography, for the compliance officer and directors;
- A business plan or description of planned activities;
- Company website (if available);
- Proof of address for directors, shareholders, and the compliance officer;
- Information regarding the criminal record status of key individuals (police certificates may be requested);
- Details of company ownership and structure (including beneficial owners);
- Information on the nature of services to be provided, expected transaction volumes, flow of funds, showing how customer transactions are processed and routed, and branch offices (if any) may also be requested.
Keep in mind that all documents must be in English or French. Filing is conducted directly with FINTRAC; notarization or use of a registered agent may be needed in certain circumstances.
Taxes on Corporate Income
In Canada, corporate taxation is generally divided into 2 categories:
- Federal corporate tax of 15% applies to all provinces;
- The general provincial corporate tax rate in British Columbia is 12%.
The combined general corporate income tax rate is 27% in the province of British Columbia. In addition to corporate income tax, Canada applies Goods and Services Tax (GST) or Harmonized Sales Tax (HST), the Canadian equivalents of VAT, on most supplies of goods and services.
Businesses, including those involved in crypto transactions, may be required to register for GST/HST and collect tax on taxable supplies, depending on their activities and revenues. The current rate is 5% GST in British Columbia. The tax treatment of a crypto-asset can only be determined after considering all the relevant facts (including its attributes) on a case by case basis.
The Process of Obtaining a Crypto License in Canada
The journey towards securing your crypto license Canada is generally straightforward and simpler compared to the process for authorization under Markets in Crypto-Assets Regulation (MiCAR) in the European Union. Here is a step-by-step overview of obtaining your MSB registration:
- First, you will need to register your company in Canada. This involves choosing and reserving the official name for your company and registering a Canadian mailing address. This step typically takes under 1 week to complete.
- Next comes the preparation and submission of your MSB registration application to FINTRAC and the entry of your company in the BC corporate register. This involves gathering all required documentation and information, as well as registering your company with the relevant provincial or federal authorities.
- Now, your application and documents will be carefully reviewed by the relevant authority. This might take up to 2 months. You will be required to provide detailed information about your business model and compliance arrangements. FINTRAC may also request completion of questionnaires and additional documentation, and you may be invited to participate in an interview as part of the registration process.
- You will receive a response from FINTRAC confirming the successful registration of your company as an MSB and entry of your MSB in the FINTRAC official registry. Along with your license, you will also receive a Certificate of Incorporation, Articles of Association, and other documents confirming your company’s legal status.
- For PSPs, the process will continue and involve the preparation of documentation and compliance with RPAA legislation in Canada. The PSP will have to register with the Bank of Canada. Additional requirements may apply for payment service providers (PSPs) under the Retail Payment Activities Act (RPAA), including registration with the Bank of Canada once the RPAA is fully in force.
Keep in mind that the MSB registration is valid for two years. Before the end of the registration period, you will need to renew your registration with FINTRAC to continue operating.. Responsibility for updating the registration lies with the owner of the company. If not renewed, your registration will lapse, and you must cease MSB activities until re-registered.
Crypto Regulation in Canada
Crypto regulation in Canada defines cryptocurrency as a means of exchange rather than a form of money, with taxation applied to each payment for goods or services using cryptocurrency. All cryptocurrency operations in Canada are regulated by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), guidelines from FINTRAC, and the Canada Revenue Agency (CRA).
Regulation of cryptocurrency in this jurisdiction ensures that activities involving virtual assets fully comply with anti-money laundering and counter-terrorism financing laws. The main regulatory regime for most crypto businesses in Canada is MSB (Money Services Business) registration with FINTRAC.
Activities that typically fall under MSB registration include:
- Foreign exchange dealing (fiat-to-fiat currency exchange, which is allowed under MSB registration but offering retail forex trading may be subject to additional regulatory requirements);
- Money transferring;
- Issuing or redeeming money orders, traveler’s cheques, or similar instruments;
- Dealing in virtual currency (including crypto exchanges and transfers);
- Crowdfunding platforms that handle funds or virtual assets for others.
The key regulatory body in this jurisdiction for anti-money laundering (AML) and counter-terrorism financing (CTF) supervision is FINTRAC, which registers and oversees MSBs.
For businesses acting as payment service providers (PSPs) in the traditional sense, such as those intermediating fiat payments between buyers and sellers, the Retail Payment Activities Act (RPAA) will apply once it is fully in force, and such businesses will also need to register with the Bank of Canada. This is a separate regime from MSB registration and is designed specifically for businesses that handle, hold, or transmit fiat funds on behalf of clients.
The key distinction is:
- If your activities involve dealing in virtual currency (e.g., crypto-to-crypto or crypto-to-fiat exchange, and money transfer using crypto), MSB registration with FINTRAC is required and generally sufficient.
- If your business holds, routes, or transmits fiat money (CAD, USD, etc.) for clients, even briefly, or initiates payment instructions on their behalf (for example, facilitating fiat payments between third parties or providing accounts for fiat transfers), you are considered a PSP under the RPAA and must also register with the Bank of Canada, in addition to MSB registration.
For example, simply accepting fiat from a client and instantly delivering crypto to them, without holding the fiat or sending it onwards, typically falls under the MSB regime only. However, if you control fiat funds between conversion and payout, or process payments between third parties, you must comply with the RPAA as a PSP.
In summary, MSB registration covers most crypto and money transfer activities, while the RPAA/PSP regime applies when you provide payment services involving fiat funds for clients. Many modern fintech and crypto businesses will need to be both an MSB and a PSP, depending on the flow of funds and the nature of their services.
In today’s world of crypto regulation, Canada is a well-respected destination best suited for companies looking to offer the following services:
- Crypto exchanges;
- Foreign exchange (fiat-to-fiat currency exchange; note that separate licensing may apply for retail forex trading);
- Payment service providers, including TransferGO, Wise, etc.;
- Money transfer services;
- Suitable for projects aiming to obtain a license for VASP activities outside the European Union (EU).
Note: Crypto projects involving certain types of stablecoins, securities tokens, or derivatives may require additional registration with provincial securities regulators, under the oversight of the Canadian Securities Administrators (CSA).
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Frequently Asked Questions
Is cryptocurrency trading legal in Canada?
Yes, cryptocurrency trading is legal in Canada. The Canada Revenue Agency (CRA) define cryptocurrency as a type of virtual asset that is secured using cryptography, using a system known as a blockchain.
Canadian law does not prohibit buying, selling, or trading virtual assets such as cryptocurrency, provided you comply with all relevant financial and tax regulations.
What are the requirements for obtaining a crypto license in Canada?
To obtain a crypto license (MSB registration) in Canada, it is obligatory to have at least 1 director, 1 shareholder, and 1 compliance officer. Typical documentation and requirements include:
- Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) compliance program
- Identification and background information for directors, shareholders, and the compliance officer
- Company ownership and structure details (including beneficial owners)
- A description of your planned business activities and expected transaction volumes
- Proof of address and criminal record status for key persons
- Any other documents requested by FINTRAC, depending on your business model
How much does it cost to get a crypto license in Canada?
The cost of obtaining MSB registration in Canada depends on several factors, including company formation fees, preparation of compliance documentation, and the scope of legal and consulting services required.
Pricing will also vary depending on your business model, corporate structure, and any additional services needed for ongoing compliance.
