Legal Status of Cryptocurrencies

The Canadian government website has some resources on laws related to digital currency in Canada. In particular, digital currencies are treated and taxed as commodities under Canadian Income Law. See also section on Securities-related laws for Canada for more details about token sales laws, which has details on when a token might be considered a security or not. In general, Canada has taken a light approach towards the regulation of cryptocurrencies.

According to Canadian legal firm Aird Berlis, personal property security law in Canada, like its Income Law counterpart, does not include tokens in the definition of “money,” but rather treats them as “intangibles,” a classification that severely restricts their utility as a mainstream payment medium and as an asset that can easily be made the subject of a security interest.“ (Source)

Regulation for cryptocurrency exchanges has been passed in 2014, to enforce Anti-Money Laundering and Anti-Terrorist Financing laws. Details are here. Exchanges must register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and will have a reporting burden to regulators for suspicious transactions, terrorist property transactions, and large cash transactions in excess of CAD$10,000. In addition, the exchange will have to investigate involvement of politically exposed peoples for transfers of CAD$100,000 or more and conduct risk assessments, as well as other events. Check the latest FINTRAC regulations for details.

Canada has a regulatory sandbox initiative which started in 2017. It seeks to support fintech businesses offering innovative products and services in Canada, allowing firms to obtain certain exemptions from securities law in Canada in a process faster than the normal application. A fintech business is encouraged to contact the securities regulatory authority in the jurisdiction where its head office is located to learn more about the sandbox. The contact information is on this site.

Digital Proof Laws

In Canada, as in many other jurisdictions in the world, recognition is given to electronic signatures. In the Canadian Personal Information Protection and Electronic Documents Act (PIPEDA), an electronic signature as “a signature that consists of one or more letters, characters, numbers or other symbols in digital form incorporated in, attached to or associated with an electronic document.” However not all documents qualify for the use of electronic signatures, including wills, negotiable instruments and land transfers. (Source)

Sources:

• Canada Securities Law on Cryptocurrency Offerings - Important Read
• Canadian Government Wesbite on Digital Currency
• Aird Berlis on Canadian Digital Currency Law
• Details on Anti-Money Laundering and Anti-Terrorist Financing Laws for Exchanges