Open a Cryptocurrency Company in Canada

Foreign investors who want to explore the financial industry in Canada can open fintech companies. These are companies which operate in one of the new branches of the financial sector: cryptocurrency, blockchain technology or virtual currency mining. Our consultants, specialized in services on company incorporation in Canada, can help you set up any type of fintech/crypto company.

Those who want to open cryptocurrency companies in Canada will be glad to find out that certain activities related to virtual money are regulated in this country. Below, our company formation agents in Canada explain the requirements related to starting a cryptocurrency business in this country.

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How to register a cryptocurrency business in Canada

The registration of a company in the cryptocurrency sector in Canada is no different from the registration of other types of companies. The limited liability company remains the most common option for both local and foreign investors who can register their crypto businesses at federal or regional level.

Our Canadian company formation consultants can help with the registration of a business which activates in the cryptocurrency sector.

Cryptocurrency activities regulated in Canada

Those who want to open cryptocurrency companies in Canada can undertake one or more of the following activities:

mining activities which enable investors to generate virtual money which can later be traded;
trading activities – cryptocurrencies can be traded as commodities under the Canadian laws;
payment service activities – investors can open a business which offers payment services with digital money;
cryptocurrency ATMs – the installation of ATMs which exchange money for cryptocurrencies are also allowed in Canada;
cryptocurrency exchange platforms can also be established under the Canadian legislation.

Apply for a crypto license in Canada

Investors who want to open a cryptocurrency company in Canada must comply with the current rules enacted in this country. Besides completing the basic steps for company formation in Canada, the cryptocurrency business must also apply for a license.

This is done following the rules of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). The obligation to obtain a crypto exchange license in Canada is applicable to the following:

companies that provide cryptocurrency exchange;
companies that provide cryptocurrency transfer services.

The crypto exchange license in Canada is known as the Money Service Business License. The obligation to obtain this license is imposed to both Canadian resident companies and foreign cryptocurrency businesses that develop their operations in connection to Canadian customers.

Investors who plan to open a company in Canada in the cryptocurrency industry and who also need to obtain a crypto license are invited to discover the following highlights of the process:

those who need to apply for a crypto license in Canada issued as a Money Service Business License can obtain it for 6 types of activities – foreign exchange, money transfers, issuing/redeeming money orders, crowdfunding, dealing virtual currencies, operating as payment service providers;
license holders who qualify in the latter category (payment service providers) need to register with the Bank of Canada in maximum 60 days prior to starting their business operations (the rule applies starting with November 2024);
investors who register a business in Canada as a crypto company that must hold a crypto license will be able to carry out their activities for a period of 2 years – in order to continue their operations, they need to renew their license registration.

License registration documentation

The crypto license in Canada must be obtained after the basic steps for the incorporation of the company have been completed. When applying for the license, investors must submit in their license application file the documentation that proves that the businessmen have set up a company in Canada. Along with these, they must present the next papers:

details on the beneficial owners of the company;
the background check on all the company’s shareholders and directors;
the business plan;
the compliance documents with the rules and regulations on Anti Money Laundering, Know Your Client and Countering the Financing of Terrorism.

Reporting to FINTRAC

Please mind that the holders of crypto exchange license in Canada have certain legal obligations. For instance, they need to report to FINTRAC whenever they observe anything that can potentially be a suspicious transaction. They also have reporting requirements concerning the Know Your Client regulations. Reporting obligations will appear when transactions of a large sum are registered.

This applies when a transaction is above $10,000 (the transfer is made in a single transaction) or when there are multiple transactions that have (together) a value above $10,000 in a period of 24 hours. The latter applies when the transactions are concluded by the same individual or legal entity.

Certain obligations appear in the case of virtual transactions above $1,000 – in such situations, the parties must disclose their personally identifiable information (PII). The PII must be presented to the beneficiary and the originator, as per the rules of the Travel Rule.

Short history of cryptocurrency laws in Canada

Although cryptocurrency is not considered a legal tender in Canada, there are many legal initiatives that were created in order to ensure a legal environment for those using virtual currencies. Canada applies numerous rules of law concerning the usage of virtual currencies, and below one can discover some of the main steps that were taken throughout the years by the Canadian institutions:

in 2014, Canada included virtual currencies in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act;
in 2017, in British Columbia was registered the 1st investment fund dealing with cryptocurrencies;
in August 2017, the Securities Administrators issued a notice on how cryptocurrencies can be regulated under the law on securities in Canada;
in 2018, the Canadian Central Bank issued an official notice which stated that cryptocurrencies can be securities;
cryptocurrencies have been taxed in Canada since 2013 and that includes cryptocurrency transactions as well.