Bitcoin: The Canadian Regulatory Landscape

This blog post gives a high-level overview of the Canadian regulatory landscape for Bitcoin. It was written by Addison Cameron-Huff, a lawyer who specializes in Bitcoin. He highly recommends that you obtain legal advice before acting in this space. 


Photo from

Dispelling the Unregulated Myth

A common myth about Bitcoin is that isn’t regulated. Although the protocol technology isn’t regulated, Bitcoin businesses operating in Canada should be aware of the laws that govern their activities.

Update: Bill C-31 has passed and will affect many Bitcoin businesses.

Federal Regulation

There are three key laws at the federal level: the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Income Tax Act, and the Excise Tax Act.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act

The principle source of money transfer rules in Canada is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (often shortened to PCMLTFA). The client identification procedures that some Bitcoin businesses have adopted usually stem from this law.

The PCMLTFA requires different actions to be taken by different classes of business. The category of most interest to Bitcoin businesses is the “money services business” (MSB). 

The PCMLTFA creates a regulatory agency called FINTRAC (in the United States there is a similar regulator: FINCEN). It also sets out severe penalties for money-laundering offences (there are other offences in the Criminal Code of Canada).

Income Tax Act

This is the main law that governs how much tax an individual or business must pay. Of most interest to Bitcoin businesses are the provisions concerning barter transactions (selling bitcoins for $), inventory (holding bitcoins to be sold) and capital gains (changes in the value of bitcoins held as an investment).

Excise Tax Act

The Excise Tax Act sets out how much HST/GST (Canadian VAT) is payable and under what circumstances. Most business are required to charge federal sales tax on sales but not all good/services are taxable.

Ontario Regulation

There are three Ontario laws that might be important for a Bitcoin business to be aware of: the Ontario Securities Act, the Consumer Protection Act, 2002 and the Sale of Goods Act. 

Ontario Securities Act

The Ontario Securities Act sets out the regulatory scheme for the buying and selling of securities (e.g. stocks, bonds, etc.). By default most transactions are banned, and businesses must find a relevant exemption that allows their activity.

This law is very similar to the United States Securities Act of 1933. In Canada the provinces (not the federal government) regulate thebuying and selling of securities.

Consumer Protection Act, 2002

The Consumer Protection Act, 2002 affects the sale of goods and services to consumers by providing them with extra rights, including the possibility of reversing unfair transactions.

Sale of Goods Act

The Sale of Goods Act sets out the rights and obligations of purchasers & sellers of goods in Ontario. 

Laws of Interest to International Businesses

For international businesses, the following may also be of interest: the International Sale of Goods Act, Ontario’s conflict of laws scheme (case law and the Rules of Civil Procedure) and arbitration rules (case law and Arbitration Act, 1991). Other provinces have different laws but they are generally quite similar.

Get A Lawyer

This post is based on the author’s experiences with Bitcoin businesses. Other legal rules may apply to your situation. Please consult a lawyer instead of relying on the legal information given in this post.