ARTICLE · 20 DECEMBER 2021

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A Legal Guide To Cryptocurrency In Canada

Devry Smith Frank LLP

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Cryptocurrency is decentralized digital money, based on blockchain technology. It is a form of currency that can be exchanged online for goods and services. However, it is not legal tender in Canada...

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Devry Smith Frank LLP

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What is cryptocurrency?

Cryptocurrency is decentralized digital money, based on blockchain technology. It is a form of currency that can be exchanged online for goods and services. However, it is not legal tender in Canada as it operates independently of any central bank, central authority or government.

The Currency Act defines legal tender as only:

Bank notes issued by the Bank of Canada under the Bank of Canada Act
Coins issued under the Royal Canadian Mint Act

How does the CRA Approach Cryptocurrency?

The CRA's position is that cryptocurrency should be treated as akin to a commodity for the purposes of the Income Tax Act. As a result, crypto transactions are subject to the same rules as barter transactions – transactions where one commodity is exchanged for another. Any income from transactions involving cryptocurrency can be treated as business income/losses or as a capital gain/loss, depending on the taxpayer's circumstances.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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