Overview — What’s Changing

The Department of Finance Canada has released draft legislation introducing a new Crypto-Asset Reporting Framework (CARF). These rules will bring crypto-asset transactions into a formal tax-reporting system for the first time in Canada.

If enacted, the rules will apply starting January 1, 2026, with the first reporting due in 2027. The purpose is simple: improve tax transparency, align with global standards, and ensure that digital-asset transactions are properly tracked and reported.

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What the New Rules Cover

1. What Counts as a Crypto Asset?

The draft rules apply to digital assets built on distributed-ledger or blockchain technology, including:

• Cryptocurrencies such as Bitcoin and Ethereum
• Stablecoins
• Certain NFTs
• Tokenized assets used for payment or investment

Some items are excluded, such as central bank digital currencies and regulated e-money products.

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2. Who Will Be Required to Report?

The rules target Crypto-Asset Service Providers (CASPs), such as:

• Crypto exchanges
• Wallet and custody providers
• Platforms that enable crypto-to-crypto trades
• Businesses facilitating transfers of digital assets

CASPs will be required to collect client information, verify identities, complete due-diligence procedures, and determine who is considered a “reportable user.”

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3. What Information Must Be Reported?

CASPs will be required to file an annual information return, reporting key details for each client, including:

• Identity and residency
• Types of crypto-asset transactions
• Crypto-to-fiat trades
• Crypto-to-crypto exchanges
• Transfers of digital assets

Reports will be filed electronically each year — with the first returns expected in 2027 for the 2026 calendar year.

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4. When the Rules Take Effect

• The reporting framework applies to activity beginning January 1, 2026.
• CASPs should begin preparing compliance systems, onboarding processes, and record-keeping procedures well in advance.

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Why This Matters — Who Is Affected

These rules impact:

Individuals

Crypto trades will increasingly be visible to tax authorities. Users should assume their transactions may be reported, similar to bank or investment-account reporting today.

Crypto-Asset Service Providers

Exchanges, wallets, and similar platforms will see increased compliance obligations, including identity verification and transaction reporting.

Businesses Accepting or Using Crypto

Transactions must now be tracked carefully to remain compliant.

Financial Institutions and Advisors

Crypto will begin to align with existing standards such as CRS and FATCA, increasing integration with traditional compliance systems.

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What You Should Do Now

For Crypto Users

• Track every transaction, including trades, transfers, swaps, and conversions.
• Keep records of Canadian-dollar fair-market value for each transaction.
• Understand whether your crypto activity is considered investment or business income.

For CASPs and Crypto Businesses

• Implement systems to identify clients and collect tax-relevant information.
• Update onboarding processes with self-certification procedures.
• Prepare for electronic annual reporting.
• Enhance record-keeping and compliance controls.

For Businesses Starting to Use Crypto

• Review how digital assets are used (e.g., payments, transfers, investments).
• Ensure transactions are tracked and categorized properly.
• Consider consulting tax professionals familiar with digital-asset taxation.

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Final Thoughts — Canada Enters a New Phase of Crypto Compliance

The introduction of the Crypto-Asset Reporting Framework signals a major shift: crypto is moving from unregulated space into a structured, transparent, and reportable environment.

Whether you’re an investor, a business user, or a crypto-asset service provider, now is the time to prepare systems, strengthen records, and understand how these changes affect your obligations.