Karsten Wenzlaff, Advisor
August 26th, 2025
EU Crypto Guidelines | March 28, 2025

Image: Guidelines - Crypto assets as financial instruments (ESMA)
Last month, the European Securities and Markets Authority (ESMA) published detailed guidelines (21 page PDF) as part of Markets in Crypto Asset Regulation (MiCAR) that help regulators and crypto companies figure out whether or not a specific crypto asset should be treated like a financial instrument and be regulated under Europe’s traditional investment rules, affecting how it's issued, traded, and supervised. This article provides an overview of the guidelines for your review.
For anyone new to securities laws, one of the first things you'll hear and/or learn is the expression, "If it walks like a duck, and talk like a duck, then it's probably a duck!" This means that regulators aren't necessarily looking how a token is built or which blockchain it runs on. What really matters is how it behaves.
Under MiFID II, a token or crypto asset is probably a tradeable security if all 3 conditions are true:
That includes tokenized shares, debt instruments, and some structured products. So if it walks and talks like a stock, Europe will treat it like one. Having said that, if any one of the above conditions is false then it doesn't qualify as a transferable security under EU rules.
Not every token that’s regulated is a stock or share. Some crypto assets are more like short-term loans (or money market instruments). Other tokens might give you a piece of a shared investment fund, placing them in the pooled fund category. Some tokens are derivatives where the price simply follows the price of something else like a stock or index.
There’s even the potential for carbon credit tokens, if they enable the right to emit greenhouse gases under Europe’s trading system. Each of these different types of token behaviours has its own legal checklist but generally, if a token offers financial returns and matches one of the above types, it will probably be treated as a regulated investment.
Some tokens are meant to unlock access to perks like discounts, special features, or premium content. The ESMA calls these utility tokens which aren't treated like investments unless they also come with for profit rights or trade on open markets like stock/shares.
Now, what about NFTs in the EU? Just because an NFT may be considered 'unique' doesn't mean it avoids the rules. If the NFT provides financial benefits or trades like a stock, then it could still be recognized as an investment. This is true even for fractional NFTs but if they act like tiny investments then they could be regulated just like regular securities.
Some tokens combine utility and investment features together and are considered hybrid tokens. In these cases, the ESMA says the financial part trumps the utility part, and like in all cases, if the token looks like an investment, it needs to follow investment rules, regardless how many other functions it provides.
This new crypto guidance (translated versions in multiple languages) helps reduce the grey area between securities and crypto assets. It also puts pressure on projects to think very carefully when designing a token's feature set, value proposition, and how it's marketed. It also shows that regulators in the EU are trying to adapt and not just crack down.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Regulation | March 27, 2025

On March 27 2025, Paul Atkins, President Trump’s pick to lead the U.S. Securities and Exchange Commission (SEC), testified before the Senate Banking Committee as part of his confirmation process. While he hasn’t yet been confirmed, Atkins published prepared remarks for his nominee hearing, explaining how he’d run the agency and what he thinks needs to change. Atkins criticized the current state of U.S. financial regulation, calling it a drag on investment and innovation.
Below are some key quotes touching upon hot button themes.
Atkins makes it clear that he wants to reset the SEC's priorities. His approach would focus on transparency, clear rules and making it easier for companies to raise capital:
“The current regulatory environment for our financial system inhibits investment and too often punishes success. Unclear, overly politicized, complicated, and burdensome regulations are stifling capital formation, while American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment.”
He promised to keep politics and fraud out of securities laws and regulations:
“I will strive to protect investors from fraud, to keep politics out of how our securities laws and regulations are applied, and to advance clear rules of the road that encourage investment in our economy to the benefit of all Americans.”
While digital assets were just one part of the hearing, Atkins highlighted the need for a clear regulatory framework for crypto:
“A top priority of my chairmanship will be to work with my fellow Commissioners and Congress to provide a firm regulatory foundation for digital assets through a rational, coherent, and principled approach. Since 2017, as I have led industry efforts to develop best practices for the digital asset industry, I have seen how ambiguous and non-existent regulations for digital assets create uncertainty in the market and inhibit innovation.”
While Atkins has finished his SEC nominee hearing in front of the Senate Banking Committee, he still needs to be officially confirmed. The voting outcome could happen quickly or take longer depending on how much push back he gets, especially around his past work, investments and connections to/with the crypto sector.
For example Senator Elizabeth Warren questioned whether those ties could affect how he regulates the space. Critics worry that he might be too soft on the crypto industry or overlook potential risks to investors. If Atkins is confirmed, it will likely end of the regulate by enforcement era that has plagued the U.S. for years, a positive signal for clearer, upfront rules.
Canadian fintechs, investors, and policymakers should be watching closely, as any changes to SEC policy could have ripple effects across markets, especially for firms operating in both countries and could influence cross-border innovation, investment and policy making.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Bitcoin Reserve | March 26, 2025

Image: Freepik
Adding bitcoin to your company's treasury is a growing strategy. This time, GameStop is back in the spotlight but not because of Reddit influencers but because of Bitcoin. The video game retailer just announced that the GameStop's board unanimously approved an update to their investment policy to add Bitcoin as a treasury reserve asset. So now there's a green light to use part of its cash or future capital to acquire Bitcoin without setting a cap on how much.
The news sent GameStop shares soaring almost 15% to $29.10 in after hours trading on March 26 2025 and came alongside their fourth quarter earnings which showed a surprising profit despite falling sales with earnings per share at $0.30, crushing analyst expectations of just $0.08.
The decision is part of a broader effort to appeal to a new generation of investors and push for a more aggressive company and bolder financial strategy. It's in line with actions taken by other corporations, such as MicroStrategy which have integrated Bitcoin into their financial strategies. The move also follows the recent executive order by President Trump to establish a strategic Bitcoin reserve.
Several Canadian public companies have also adopted Bitcoin as part of their treasury strategies.
Goodfood Market Corp. (TSX: FOOD) In January 2025, Goodfood became one of Canada’s first consumer-facing companies to adopt Bitcoin as part of its treasury. The company made an initial $1 million CAD investment via a spot Bitcoin ETF.
Neptune Digital Assets Corp. (TSXV: DASH) Between January 26 and February 3, 2025, Neptune acquired 20 more BTC for $2 million USD. This brought their total Bitcoin holdings to 376 BTC.
Bitcoin Well Inc. (TSXV: BTCW) In December 2024, Bitcoin Well began a Bitcoin treasury strategy by adding 7.5 BTC and announced plans to raise $2 million through a convertible debenture to expand their holdings.
DeFi Technologies Inc. (NEO: DEFI) In 2024, DeFi Technologies officially made Bitcoin its primary treasury reserve asset and later diversified into Solana and Core DAO staking.
Matador Technologies Inc. (TSXV: MATA) Matador who is focused on tokenizing real world assets (RWA) expanded its Bitcoin treasury in late 2024 by acquiring an additional 3.46 BTC.
LQwD FinTech Corp. (TSXV: LQWD) As of early 2025, LQwD held 136 Bitcoins. Their most recent purchase added 5 BTC to their long-term reserve strategy tied to the Lightning Network.
Kontrol Technologies Corp. (CSE: KNR) In November 2024, Kontrol announced it would begin holding Bitcoin directly as part of a capital preservation plan, starting with a $1 million CAD purchase.
These above companies at the front line of a growing trend among Canadian public firms (there are many private companies, too!) to integrate Bitcoin into their financial strategies, looking to diversify assets and hedge against inflation.
Bitcoin's interest continues to grow and is starting to be treated as a serious asset by more and more companies who are rethinking how they handle money amidst economic uncertainties and inflation (potential stagflation), and anyone in finance, policy and tech should be watching closely.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Crypto Roundtable | March 25, 2025

Image: Freepik
On March 21, 2025, the U.S. Securities and Exchange Commission (SEC) held its first public roundtable focused on crypto. Interim SEC Chair, Mark Uyeda, delivered opening remarks, and started by admitting that the law hasn't kept pace with digital asset innovation.
Uyeda pointed out that U.S. courts can’t even agree on how to apply the Howey Test, a legal rule from 1946 that’s often used to decide if something is an investment contract. Some courts say what happens after someone buys a token matters most. Others say what happens before the sale is enough. This kind of confusion makes it hard for the industry to know what rules to follow. While the SEC's hope is that the roundtable was a first step towards more clarity and a better approach towards regulating crypto, some lawmakers felt that the SEC's first crypto roundtable was a missed opportunity.
Bitcoin.com reported that the discussions were fiery. Some panelists said most crypto tokens are clearly securities. Others argued the old rules don’t fit new technologies.
As illustrated by the comments above, not everyone agreed and there's still no consensus on how to classify digital assets.
A former prosecutor and crypto lawyer Renato Mariotti penned an OpEd for CoinDesk, said the roundtable was disappointing. While he agreed it was better than the SEC’s past approach of regulating by enforcement, he felt the discussion focused too much on old arguments instead of evaluating solutions.
He was also quick to point out that the Commodity Futures Trading Commission (CFTC), another key regulator for crypto, wasn't involved at all or even mentioned during the session. As such the SEC missed a chance to contribute ideas that will help shape new crypto laws currently being discussed in Congress.
Industry just wants clear rules, and in order to develop them, it's important for the SEC and CFTC to cooperate with everyone at the table. Lessons to learn here. The next roundtable will focus on DeFi and stablecoins, where clarity is also badly needed.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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De-regulation | March 24, 2025

Image: Freepik/wirestock
On Friday March 21 2025, the Trump administration made two announcements related to the relaxation of financial oversight and corporate transparency requirements. First, the U.S. Treasury removed economic sanctions placed on Tornado Cash originally applied by the previous administration, a popular crypto mixing tool used by money launderers and accused of helping North Korean hackers hide stolen funds. Then secondly, in a separate Interim Final Rule (36 page PDF) issued by the Financial Crimes Enforcement Network (FinCEN), suspending beneficial ownership reporting requirements for most U.S. registered companies and U.S. citizens.
Tornado Cash was placed on the U.S. sanctions list in 2022 after allegations it facilitated more than $7 billion in illicit transactions, including over $455 million connected to the Lazarus Group. The protocol operates autonomously on the Ethereum blockchain and is not controlled by any entity. Legal challenges last November, including a key court ruling in 2024, argued that the Treasury had exceeded it's authority in sanctioning open-source software.
In response, the Treasury officially removed Tornado Cash from its sanctions list, acknowledging the legal and technical landscape in the case but emphasized it would continue to monitor national security risks involving crypto. Open source advocates welcomed the decision while lawmakers and cybersecurity experts warned that the move may open the door to continued misuse of the crypto mixing tool by bad actors.
Additionally, the U.S. Treasury’s FinCEN divison rolled back key parts of the Corporate Transparency Act that was passed in 2021 to prevent criminals from hiding behind anonymous shell companies. The original law required most U.S. companies to report who really owns them, and about 32 million businesses were expected to comply but now most U.S. firms and citizens no longer have to report ownership. Only some foreign companies still need to file, and they don't have to name U.S. owners.
The Treasury says the change will reduce costs for small businesses and is part of a broader push to deregulate. Critics warn that it will weaken efforts to fight money laundering and financial crime because without data, investigations will have a harder time tracking illegal activity hidden behind complex company setups.
These changes are being framed as pro-business and innovation-friendly but one questions how the U.S. will continue to meet international expectations around transparency, financial integrity and compliance? For Canadian fintechs, investors and regulators with cross-border interests, due diligence processes will need to adjust in the absence of ownership data from U.S. firms. In the same vein, regulatory checks and balances towards privacy tools in crypto markets could affect risk assessments, partnerships and compliance frameworks.
As most jurisdictions move to strengthen ownership disclosure and digital asset monitoring, the U.S. is going for a lighter touch (and their policy divergence grows wider). Will these changes support competitiveness or increase exposure to financial abuse? Another policy that Canadian fintechs with cross-border engagements need to follow closely and adjust as required.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Crypto M&A | March 21, 2025

Image: Freepik/wirestock
On March 20 2025, Kraken announced that it has entered into an agreement to acquire NinjaTrader for $1.5 billion, a Chicago-based platform know for providing everyday retail traders access to futures markets, the largest crypto and TradFi deal to date.
At first glance, it might seem like U.S. retail traders already have access to both crypto and traditional futures—and technically, they do. For instance, platforms like Interactive Brokers let you trade Bitcoin and oil futures listed on the CME but this experience is still rooted in the traditional finance world. You’re using a conventional brokerage interface with separate workflows for spot crypto and regulated futures, and often without native crypto funding or wallet integration. Coinbase offers small-sized crypto futures (limited derivatives), but you can’t use the same account to trade traditional commodities or financial futures. And many crypto-native platforms don’t offer access to regulated futures at all, especially not in the U.S.
What Kraken is building through its acquisition of NinjaTrader is a more integrated setup because they are acquiring a registered Futures Commission Merchant (FCM) license from the U.S. Commodity Futures Trading Commission (CFTC), which allows them to combine regulated futures access with crypto native infrastructure, all under a single app, account, and compliance framework. So Kraken becomes a direct gateway to both crypto and traditional derivatives - a 'one stop shop' for trading everything from Bitcoin to corn futures under a fully regulated setup.
Also there's a global market expansion benefit. Kraken already has licenses in the U.K., Europe, and Australia. Now, with NinjaTrader's U.S. footprint, Kraken can roll out a consistent product across multiple jurisdictions which is something very few companies can do in either the crypto or traditional finance world.
This acquisition brings two trading world's together that have mostly stayed separate until now: (1) Crypto trading which is 24/7, quick settlement and lots of innovation (but often kept at arms lengths by U.S. regulators); an (2) Traditional futures trading - highly regulated, slower, and not always that easy for retail traders to access.
Kraken is trying to bridge the gap by creating a unified experience with a single login/dash/account that can hold crypto and cash, offering futures/crypto/FX tools and more, all in one place with real-time settlement and potentially better pricing. It will simplify a lot of friction for retail traders and for professionals, it opens up cross-asset strategies that were harder to execute across multiple platforms before.
Arjun Sethi, Kraken co-CEO:
“Traditional markets run on post-WWII, 1950s banking systems, exchanges that close at 4 p.m. ET and settlement delays that take days to resolve. Crypto rails fixed these issues, operating with efficient and real-time infrastructure. But legacy finance and crypto have remained separate ecosystems, until today. This transaction is the first step in our vision of an institutional-grade trading platform where any asset can be traded, anytime,”
Kraken’s move to buy NinjaTrader is highly strategic and proves that fintech crypto pltforms can evolve beyond niche products and become full service, bridging traditional finance and crypto. Will Canadian crypto trading platforms be allowed to offer a similar one-stop-shop trading experience, and will Canadian regulators support it?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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March 21, 2025

By a Canadian Finance Journalist – Since the early days of Bitcoin ATMs in Vancouver, Canada has been a testing ground for cryptocurrency innovation. But behind every new crypto venture lies a complex web of regulations. In Canada, those rules are acting as both guardrails and gateways, steering the country’s financial innovation in surprising ways.
Imagine a Toronto startup founder waking up to the news that Binance is pulling out of Canada. On one hand, it’s a blow to the local crypto scene. On the other, Canadian investors still have access to the world’s first Bitcoin ETF – a product born because regulators gave it a green light when others wouldn’t. This push-and-pull captures Canada’s approach: fostering innovation with clear rules, while keeping a tight grip on risk. The question is, has Canada struck the right balance?
Canada doesn’t have a single all-powerful crypto regulator. Instead, several agencies oversee different pieces of the puzzle:
In 2014, Canada became the first nation to write cryptocurrency into law by amending its money laundering act . That early move signaled that regulators saw crypto’s potential – and its risks – from the start. Notably, cryptocurrencies are not legal tender in Canada; the CRA treats them as commodities for tax purposes . In plain terms, using Bitcoin to buy a cup of coffee isn’t the same as using loonies – at least in the eyes of the law.
To understand how various rules impact innovation, let’s break down Canadian crypto regulations by key areas:
| Regulatory Area | Canadian Approach (as of 2025) |
| Trading Platforms | Must register with securities regulators (CSA); comply with investor protection rules (custody, audits); no leverage for retail clients; foreign exchanges serving Canadians must play by Canadian rules or exit. |
| Taxation | Crypto treated as a commodity for tax; capital gains (50% taxable) or business income apply; upcoming global reporting standards to increase transparency by 2027. |
| AML Compliance | Crypto businesses classed as MSBs must register with FINTRAC; strict KYC (Know Your Customer) and reporting of large transactions (≥ $10,000) are required to combat money laundering and terrorist financing. |
| Licensing | No special “crypto license,” but trading platforms need securities registration (often as dealers) and adherence to IIROC rules; some provinces require separate money service licenses for fiat-to-crypto businesses. |
| Stablecoins | Treated cautiously: regulators view stablecoins as possible securities/derivatives; CSA temporarily allows fiat-backed stablecoins under tight conditions, but unregulated stablecoins face restrictions. |
| Decentralized Finance (DeFi) | Largely unregulated directly; activities may still trigger securities or AML laws if there’s a central party; regulators monitoring closely, but true DeFi remains a gray zone for now. |
Canada’s rulebook is evolving. With these foundations in mind, let’s explore how they’re influencing innovation for startups, retail investors, and institutions.
Crypto trading platforms in Canada operate under the watchful eye of the CSA. After the collapse of exchanges like QuadrigaCX and the “crypto winter” turbulence, regulators hardened their stance. “Following recent events in the crypto market, the Canadian Securities Administrators (CSA) is strengthening its approach to oversight of crypto trading platforms by expanding existing requirements for platforms operating in Canada.” In practice, that means any crypto exchange serving Canadians must either register and play by the rules or shut down.
In 2020, this approach was surprisingly welcoming – Wealthsimple Crypto was allowed to launch as Canada’s first regulated crypto platform through a CSA sandbox experiment. Regulators granted it time-limited relief to test its platform, with an OSC official calling it “the first crypto asset platform to be registered with Canadian securities regulators”. This sandbox model let innovators launch new services under supervision, a clear win for financial innovation. It gave startups a chance to prove their ideas in-market without immediately meeting every traditional requirement.
However, as the industry grew, the CSA shifted to a stricter regime. In 2022, it began requiring all crypto exchanges (domestic or foreign) to file Pre-Registration Undertakings (PRUs) – essentially a promise to comply with Canadian securities laws while their applications are processed. The undertakings impose core rules that have reshaped what exchanges can offer:
These measures were put to the test in 2023 when some big names faced a choice: comply or leave. Binance, the world’s largest exchange, decided to exit Canada, citing the CSA’s new stablecoin guidance and investor limits as making the market “no longer tenable” for its operations. Meanwhile, competitors like Kraken and Coinbase stayed, submitting to the oversight. The short-term effect was fewer foreign platforms for Canadians, but a more controlled environment on those that remain.
For retail investors, this has been a double-edged sword. On one hand, Canadians were largely shielded from the FTX-style catastrophes; no registered platform here can rehypothecate (reuse) customer coins or offer wild 100x leverage. There are even limits on illiquid altcoin investments for average joes. On the other hand, some crypto enthusiasts feel stifled – they have to live with fewer choices and sometimes annoying buy limits on certain tokens. That said, most observers agree the trade-off leans positive for trust. When FTX collapsed, Canadian users were relatively unscathed because FTX had to cease Canadian operations earlier for lack of registration.
And innovation? Cleared regulation has actually spurred new Canadian products. The best example: in 2021 Canada approved the world’s first Bitcoin ETF, beating the U.S. to the punch . This gave investors a safe, regulated way to get Bitcoin exposure through their brokers and registered accounts. The Purpose Bitcoin ETF saw nearly $400 million in trading volume in its first two days of launch – a testament to demand unlocked by regulatory approval. By 2023, over a dozen crypto ETFs (Bitcoin, Ether and even crypto baskets) traded on Canadian exchanges, offered by major firms. These products simply wouldn’t exist without a regulator willing to green-light innovation.
One often-overlooked catalyst for innovation is tax clarity. In Canada, the tax rules for crypto are relatively straightforward, which has encouraged both individuals and businesses to participate without fear of unknown tax traps.
The Canada Revenue Agency (CRA) treats cryptocurrency like a commodity or investment property. What does that mean in practice?
The key point is: crypto transactions aren’t tax-free in Canada, but they also aren’t subject to any special punitive crypto tax. They slot into existing frameworks. This clarity has been crucial for institutional players. Fund managers and startups know the tax implications and can plan accordingly – a stark contrast to some countries where crypto taxation is a fog of uncertainty.
Looking ahead, Canada is gearing up to adopt new global tax reporting standards for crypto. The government has agreed to implement the OECD Crypto-Asset Reporting Framework (CARF) by 2027, which will require Canadian crypto brokers and exchanges to report users’ holdings and transactions to the CRA (and by extension, foreign tax authorities). While that means less anonymity, it also further legitimizes crypto in the eyes of big institutions (since hiding assets will be harder, sophisticated investors are more comfortable that the market is above-board). In a way, these tax transparency moves may invite more traditional capital into the Canadian crypto space, fueling innovation through investment.
If you ask a Canadian crypto entrepreneur about their biggest headaches, FINTRAC compliance will be near the top of the list. Since June 2020, any business “dealing in virtual currency” in Canada is legally a Money Services Business (MSB) – meaning it must register with FINTRAC and implement a full anti-money laundering (AML) program . “Before beginning to operate in Canada, you must register your money services business (MSB) … with FINTRAC.” This applies to exchanges, crypto ATMs, payment processors, and even foreign companies targeting Canadians.
For startups, this meant hiring compliance officers, setting up identity verification (KYC) processes, monitoring for suspicious transactions, and reporting large transactions over $10,000. It’s a lot of red tape for a small fintech. Yet, this regulation has also been a blessing in disguise for innovation:
Of course, compliance has costs. Some smaller startups pivoted away from handling customer funds (e.g., focusing on blockchain software rather than exchanges) to avoid the FINTRAC overhead. But overall, Canada’s early move on AML – coming years before many countries – set a stable foundation for a crypto industry that could integrate with the existing financial system rather than operate in isolation.
Notably, Canadian regulators have signaled that even novel crypto activities must follow AML laws. When a wave of Bitcoin ATMs and even crypto-based casinos popped up, FINTRAC ensured those too fell under MSB rules. So while Canadians are free to engage in, say, crypto gambling or mixing services, any business on Canadian soil offering such services must conduct KYC checks. There’s effectively no way to legally offer completely anonymous crypto services in Canada. This can dampen certain “pure cypherpunk” innovations, but it nudges the industry toward solutions that marry privacy tech with compliance (an emerging area of innovation itself).
Stablecoins – those crypto assets pegged to fiat currencies like the US or Canadian dollar – are seen as both vital innovations and potential threats. Canadian regulators have taken a cautious but measured approach to them.
The CSA has made it clear that if a crypto asset walks and talks like a security, it will be treated as such. In early 2023, the CSA explicitly stated that many stablecoins likely qualify as securities and/or derivatives under Canadian law . This means trading or issuing them falls under securities legislation. For crypto platforms, that was a wake-up call: unregulated stablecoins were basically off-limits. In fact, by January 2023, Canadian exchanges like Crypto.com halted trading of popular stablecoins (like USDT) for Canadian customers to avoid running afoul of these rules.
However, regulators haven’t outright banned stablecoins; they’ve tried to channel their innovation. The CSA gave interim relief allowing certain fiat-backed stablecoins (like those backed 1:1 with reserve dollars) to continue trading for a period, as long as platforms adhered to strict conditions. They set an initial deadline (April 2024, later extended) for platforms to either get their stablecoin offerings in compliance or wind them down . This approach basically said: “We see you have a use for stablecoins, but we’re not entirely comfortable. Prove to us these are safe and genuinely backed, or stop offering them.”
For innovators, this is a mixed bag. On one hand, it’s stifling to any Canadian project that wanted to launch a new algorithmic stablecoin or a CAD-pegged token – they’d face an uphill battle convincing regulators. On the other hand, the clarity has a silver lining: only high-quality, fully reserved stablecoins are likely to survive in Canada’s market. That could attract more institutional usage of stablecoins, knowing they meet securities standards. Indeed, Canada’s largest securities exchange (TMX) invested in a blockchain firm to explore tokenized Canadian-dollar stablecoins under oversight, showing that regulated innovation is happening.
Even the banking regulator OSFI stepped in to guide stablecoin use for financial institutions. In an effort to let banks participate in digital innovation, OSFI released guidelines classifying crypto assets for bank balance sheets. They’ve signaled that certain stablecoins (those fully backed by high-quality reserves) could be treated more leniently under bank capital rules . OSFI stated it “has finalized guidance for federally regulated banks … that allows innovation while setting out expectations on risk management” . Translation: Banks in Canada can experiment with crypto (including stablecoins), but must do so in a safe, limited way. This is crucial for financial innovation because it means things like tokenized deposits or bank-issued stablecoins might soon become reality, backed by the confidence that regulators have outlined the guardrails.
What about the wild world of DeFi, DAOs, and crypto activities that don’t fit neatly into existing regulations? This is where Canada – like every country – is still figuring things out.
Decentralized Finance (DeFi) protocols (think of lending platforms like Aave or decentralized exchanges like Uniswap) operate without a traditional intermediary. By their nature, they challenge the idea of having someone to register or regulate. In Canada, there are no explicit DeFi laws yet, but that doesn’t mean regulators aren’t paying attention. The CSA and Bank of Canada have both published discussion papers on DeFi, noting that it presents new risks and may require novel regulatory approaches . For now, if a DeFi project has any centralized foothold (developers in Canada, or marketing to Canadians), it could fall under existing laws – for example, securities law if a DeFi token is being sold to investors, or AML law if a DEX front-end is run by a company in Canada.
In practice, Canadian authorities have mostly focused on educating the public about DeFi risks rather than cracking down on DeFi protocols themselves. They warn that using these services is risky and likely outside the realm of investor protection. This hands-off approach has allowed Canadian blockchain devs to contribute heavily to global DeFi projects (after all, Ethereum’s co-founder is Canadian, and many Toronto and Vancouver developers are active in Web3). The lack of direct bans or onerous rules on DeFi has preserved space for innovation, essentially letting cutting-edge research and development happen in Canada – albeit often for protocols that operate globally rather than specifically in Canada.
Other grey zones include crypto gambling and NFTs. BTC gambling sites, often offshore, attract some Canadian users. Regulators haven’t directly addressed these with new rules, but existing laws still apply (a Canadian can’t lawfully run a crypto casino without provincial gaming authority approval and FINTRAC compliance, for instance). NFTs (non-fungible tokens) similarly sit in a regulatory grey area: when used as collectibles or art, they’re largely unregulated; but if they’re sold as investment schemes, securities laws might kick in. Canadian securities regulators have hinted that they examine NFT offerings case-by-case to see if they cross into investment contract territory.
For startup founders in these frontier areas, the current strategy is often “innovate first, but engage regulators early.” Canadian regulators have shown willingness to talk – the OSC even set up a dedicated Office of Economic Growth and Innovation and the CSA launched a Financial Innovation Hub (FinHub). The CSA FinHub’s mission is “to support innovation in the Canadian capital markets that presents benefits for investors” . They invite fintech firms to consult on how a novel DeFi app or crypto product might fit within (or require changes to) the rules. This kind of dialogue can help shape future regulations with innovation in mind. It’s a slow process, but it’s there.

Are Canada’s crypto regulations fueling innovation or putting out the spark? The truth is a bit of both, but recent trends suggest a harmonic convergence of sorts – where clear rules are actually attracting more innovation in many respects. Let’s look at some evidence:
That said, challenges persist. Compliance costs are burdensome, and some argue that retail investors are over-protected to the point of limiting opportunities (for instance, strict buy limits on certain tokens). There’s a lingering concern that as other jurisdictions (like Dubai or certain U.S. states) position themselves as crypto havens, Canada could miss out on the most daring innovations if its regime is seen as too rigid. Striking the right balance is an ongoing dance. Canadian regulators often emphasize they aim to be “technology-neutral” – they don’t want to pick winners or losers in innovation, as long as core principles (like investor protection, fairness, financial stability) are upheld.
For startup founders, the path forward in Canada involves cooperation with regulators at every step. As one checklist, if you’re launching a crypto venture in Canada, you will likely need to:
Meanwhile, retail investors in Canada can take comfort that the platforms available to them are far more vetted than in many countries. They also have access to innovative investment vehicles (ETFs, closed-end funds, even crypto savings accounts under securities oversight) that didn’t exist a few years ago – a direct result of regulators allowing mainstream financial innovation. Institutional players, too, have more avenues to participate (like futures-based ETFs, custodian services, and soon perhaps tokenized bonds or deposits) with regulatory blessings.
Canada’s experiment in taming the crypto frontier is ongoing. By laying down clear ground rules, it has undeniably influenced financial innovation – mostly by encouraging it within a safer framework. The country has proven that you can have Bitcoin ETFs and blockchain startups alongside strong consumer protections. As regulations continue to evolve, Canada is likely to refine its approach: perhaps crafting tailored rules for DeFi, tweaking securities laws to accommodate new token models, or even introducing a digital Canadian dollar that coexists with private crypto.
For now, the Canadian crypto scene feels cautiously optimistic. The guardrails are firmly in place, but they just might be the very thing that gives investors, entrepreneurs, and institutions the confidence to drive faster. As a result, financial innovation in Canada isn’t slowing down – it’s taking new forms, from blockchain-based clearing systems at major banks to green crypto mining operations in Alberta. In true Canadian fashion, it’s a balanced approach: not shouting about a crypto revolution, but steadily building the foundations of a crypto-infused financial future.
In the words of one industry observer, Canada has shown that effective regulation and crypto innovation are not enemies, but potential allies. The coming years will reveal just how far that alliance can go, and whether Canada can maintain its reputation as a place where fintech innovation thrives under the rule of law . One thing is certain: the rest of the world is watching this grand experiment, and countless founders and investors are betting that Canada’s regulated path is the right one.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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NCFA Canada
Craig Asano
CEO and Executive Director
casano@ncfacanada.org
ncfacanada.org


