September 28, 2026 | NCFA Insight | Digital Assets Blockchain And Tokenization, Competition And Market Structure, Risk Compliance And Regtech, Wealth Investing And Trading

Crypto Surveillance Costs And Market Structure

On September 28, 2026, the Canadian Investment Regulatory Organization (CIRO) is accepting final comments on a crypto fee proposal that would add a separate annual surveillance charge for regulated crypto trading platforms. Minimums would start at C$50,000 for Level 1 firms and C$100,000 for Levels 2 and 3. The model would start July 1, 2027, with full cost recovery beginning April 1, 2028.

Crypto firms already pay dealer and other regulatory charges in Canada. The proposed fee would recover the added cost of monitoring crypto trading, including activity involving outside venues. How a platform reaches the market changes the surveillance work required and, under this proposal, would also change the regulatory bill.

Three Trading Structures, Different Surveillance Bills

The proposal divides crypto trading platforms into three levels. They don't represent company size. They describe how trades reach the market and what the regulator has to monitor.

Total surveillance costs would first be divided among the three levels. Each level's share would then be allocated among its members using trading activity. For its illustrations, CIRO used surveillance weights of 1 for Level 1, 3 for Level 2 and 10 for Level 3. Those weights represent its estimate of the work required for each structure.

Once full cost recovery begins in April 2028, CIRO estimates that a small Level 1 member could pay C$50,000 a year, while a large one could pay C$75,000 to C$125,000. Level 2 ranges from C$100,000 for a small member to C$175,000 to C$250,000 for a large one. A large Level 3 marketplace could reach C$200,000 to C$300,000. The current estimated annual crypto surveillance cost pool is about C$1 million, although membership, trading activity and vendor costs can change that amount.

A new Level 1 member with fewer than 100,000 trades during the 12 months before onboarding can qualify for a C$25,000 surveillance fee in its first fiscal year. The normal Level 1 minimum then becomes C$50,000. Levels 2 and 3 don't receive that bridge under the proposal.

See Are Regulators Opening Markets While Raising Costs?

A dealer using outside liquidity, a Canadian arm connected to an affiliated foreign venue and a Canadian marketplace aren't three versions of the same licence. They require different surveillance work, which is why their proposed fees differ.

What Each Canadian Operating Model Actually Pays

The crypto surveillance charge would be only one part of the Canadian cost stack. A crypto dealer also pays an annual dealer fee based on revenue and its number of Approved Persons. Under CIRO's proposed July 2027 fee schedule, the CTP category does not have the C$25,000 minimum dealer fee that applies to ordinary Investment Dealers.

The annual dealer calculation uses the firm's revenue component plus C$300 for each Approved Person. Using the FY2027 revenue rate of 0.000943033, a crypto dealer with C$5 million in regulated revenue and 20 Approved Persons would pay about C$10,715 for the dealer layer. That is separate from the proposed crypto surveillance charge.

A new crypto dealer also pays a C$40,000 entrance fee. C$6,250 of that amount is an application review deposit that can be credited toward the annual dealer fee after approval. A newly approved dealer must also contribute 0.5% of its expected initial capital to CIRO's Restricted Fund.

A Canadian marketplace adds more setup costs. The minimum Regulation Services Agreement fee is C$25,000, while required connectivity and testing starts at C$66,500. Both can rise if more work is required. New functionality can also create additional technology development and testing costs.

The table separates charges paid to get started from fees that continue each year. It doesn't include legal work, audits, required working capital, custody, insurance, staffing or Canadian Investor Protection Fund assessments. Marketplace technology work can also push the Level 3 entry cost above the minimum shown.

An existing CIRO Investment Dealer has another route. Adding a crypto trading platform business line carries a C$10,000 business change fee instead of the C$40,000 entrance fee for a new dealer applicant. The firm's existing annual dealer obligations continue and the crypto surveillance charge would be added to them.

See: Canadian Crypto Trading Platform Compliance Framework

Take the same established firm with C$5 million in regulated revenue and 20 Approved Persons. Its annual dealer fee would be about C$10,715. As a Level 1 platform paying the minimum surveillance charge, the two known CIRO layers would total about C$60,715 a year. At the Level 2 or Level 3 minimum, they would total about C$110,715 before any marketplace costs.

A Level 3 Canadian marketplace starts with the same dealer costs as another CTP, then adds marketplace setup costs and a higher surveillance burden because CIRO directly monitors its orders, trades and market messages.

NCFA’s view is that the surveillance fee cannot be judged by the C$50,000 or C$100,000 minimum alone. The full cost depends on how a platform enters Canada, whether it operates as a dealer or marketplace, where trades are executed and how much activity it generates. A scaled dealer may absorb these charges relatively easily. For a new entrant or domestic marketplace, the same fixed costs take a larger bite before the business has built volume.

That makes the structure of the fee as important as the amount. Canada is asking firms that create more surveillance work to pay more of that cost, which has a clear regulatory logic. At the same time, operating Canadian marketplace infrastructure carries costs that a dealer using outside liquidity may avoid. Whether those differences are large enough to influence where firms build, route trades or invest in Canadian infrastructure is the competition question worth watching.

Other Markets Put Regulatory Cost In Different Places

Crypto firms in other major markets also pay for licensing and supervision. In the markets compared below, those costs are collected through different fee layers and formulas. Canada's proposal adds a separate crypto market surveillance charge on top of its dealer calculation.

Canada is the only market in this comparison that publishes crypto surveillance as a separate recurring fee layer on top of the dealer calculation. That doesn't mean regulators elsewhere supervise crypto markets for free. The costs are collected differently. New York comes closest to the same cost recovery concept because its annual assessment explicitly recovers supervision and regulatory operating costs using transaction volume, custody and shared expenses.

The United Kingdom currently charges from income rather than trading architecture. Under the 2026/27 FCA formula, a crypto business pays £2,251 a year plus £6.01 for every £1,000 of annual crypto income above £100,000. Using the Bank of Canada's September 25 rate, C$5 million equals about £2.67 million. The resulting FCA annual fee is about £17,685, or C$33,100.

Use the same C$5 million revenue example in Canada with 20 Approved Persons and the dealer layer comes to about C$10,715. Add the Level 1 surveillance minimum and the two known annual CIRO charges total about C$60,715. The Canadian number rises with surveillance activity, while the UK formula rises with income.

The two numbers aren't directly comparable because the regulators are charging for different functions. Britain's current annual crypto fee funds money laundering supervision. Canada's proposed charge would sit beside the dealer fee and specifically recover crypto surveillance costs.

The UK is also preparing a fuller crypto regime. Its application gateway opens September 30, 2026, with the new regime taking effect October 25, 2027. Operating a qualifying crypto trading platform carries a £28,150 application fee under the new fee schedule. That is an entry charge, not an annual surveillance fee. The recurring cost structure will be more useful for comparison once the new regime is in force.

See: Are Regulators Opening Markets While Raising Costs?

Singapore uses a much flatter published fee structure. Its digital token service regime lists a S$1,500 application fee and S$10,000 annual licence fee. At the Bank of Canada's September 25 exchange rate, S$10,000 is about C$11,100. The published licence fee does not rise with the firm's trading volume.

Hong Kong's published licence charges are also small compared with Canada's proposed surveillance minimum. The annual virtual asset service licence fee is HK$4,740, about C$855 using the same September 25 exchange date. That isn't the full cost of running a Hong Kong trading platform. Other regulated activity licences, responsible officers, external assessments and compliance costs can also apply.

New York can't be reduced to one reliable comparison number. Its annual virtual currency assessment combines a supervisory component with a regulatory component. Transaction volume and custody help determine the supervisory share, while remaining regulatory operating costs are divided among licensees. Without the regulator's assessment inputs for a specific firm, assigning the hypothetical company a fixed dollar bill would create false precision.

Britain currently scales its annual fee with income. Singapore uses a flat annual licence charge. Hong Kong charges by licence and regulated activity. New York allocates supervisory costs using business activity. Canada would keep its dealer calculation and add a second charge tied directly to crypto surveillance structure and activity.

CIRO says the added charge is meant to recover the surveillance costs created by crypto trading rather than leave the rest of its membership subsidizing them. A domestic marketplace generates more orders, messages and direct surveillance work than a dealer sending executions elsewhere. The business question is whether those differences become large enough to affect where firms invest and whether marketplace infrastructure is built in Canada. At full cost recovery, the crypto surveillance charge alone could range from C$50,000 for a small Level 1 dealer to as much as C$300,000 for a large Level 3 marketplace.

What Happens After Sept 28

Once comments close, CIRO will review the submissions and decide whether the fee structure needs to change before seeking the approvals required to put it into force. CIRO's rulemaking process includes reviewing public comments, obtaining approval from the Canadian Securities Administrators and then publishing the final rule and implementation details. That means the C$50,000 and C$100,000 surveillance minimums, the treatment of new entrants and the three level structure can still change before implementation. CIRO's policy process makes clear that proposals remain subject to comment and approval until a final implementation notice is published.

NCFA sees merit in tying surveillance fees to the work a platform creates, but a fixed cost floor can bite hard for smaller platforms. A C$50,000 or C$100,000 minimum is a much larger burden for a new entrant than for a scaled dealer, and a Canadian marketplace also faces setup costs that a dealer using outside liquidity may avoid. CIRO's proposed surveillance model may reflect genuine differences in regulatory work, but the final structure should still be judged against the full cost of participation. If the combined dealer, surveillance and marketplace charges become materially heavier than comparable regulatory costs elsewhere, Canada could make entry less attractive or give firms fewer reasons to build locally.

Talking Point

Strong surveillance has a clear purpose, but Canada also needs to watch whether the cost structure narrows competition or discourages domestic infrastructure.

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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