Canada Mandates Annual Disclosure for Cryptocurrency Service Providers by 2027

Canadian authorities have announced the introduction of a new financial law targeting cryptocurrency service providers, in alignment with federal budget regulations established in 2024. The law focuses on comprehensive reporting requirements aimed at preventing money laundering and terrorist financing.

Key provisions include mandatory annual disclosure of transaction values and details, as well as customer information. Scheduled for implementation in 2026, these rules will apply nationwide to all service providers, including agencies, traders, and crypto teller operators.

Canada's Regulatory Roadmap: Embracing the Crypto-Asset Reporting Framework

Regulators in Canada plan to adopt the Crypto-Asset Reporting Framework (CARF) once available. In June 2022, the OECD endorsed a 15-point charter emphasizing the free flow of data related to crypto transactions, in line with a G20 directive from the previous April. The OECD is tasked with developing mechanisms to enhance transparency in the financial system.

The Canadian government has allocated CA$51.6 million to the Canada Revenue Agency (CRA) over five years, beginning in the fiscal year 2024–25. These funds will support the implementation of the new reporting tool and associated compliance measures.

Canada's Crypto Reporting Regulations: Stricter Oversight and Compliance Measures

Under the legislation, transactions subject to reporting include fiat-to-crypto and crypto-to-crypto swap pairs, as well as transfers of crypto assets. Non-compliant individuals will face restrictions on accessing cash and other untraceable funds, falling under the OECD's common reporting mechanism.

Cryptocurrency companies will be required to provide detailed client information, including full names, residential addresses, and dates of birth. The CRA will set reporting standards for both Canadian and non-resident clients.

Canada's Crypto Reporting Timeline and Regulatory Landscape: Fostering Trust and Security

The first exchange of reported data is scheduled for 2027, allowing firms adequate time to adjust their systems and processes for compliance. The regulation aims to foster a trusted environment for crypto transactions, addressing concerns related to taxation, money laundering, and global security, as recognized by Interpol.

In addition to the new financial law, Canadian securities regulators proposed regulations in January targeting traditional investment funds with holdings in crypto assets. These proposals restrict funds from engaging in crypto activities unless meeting specified regulatory requirements and prohibit public funds from purchasing or holding NFTs, aligning with risk mitigation measures for retail investors.