Canada’s tax authority says many crypto users are failing to meet income-tax rules, raising concerns about widespread non-reporting across the digital asset sector.
The Canada Revenue Agency (CRA) informed The Canadian Press that nearly two in five taxpayers who use cryptocurrency platforms exhibit signs of evasion or other high-risk behavior.
CRA Flags Large Compliance Gaps
According to the CRA, 15% of cryptocurrency taxpayers have not yet submitted any returns. Among those who have filed, 30% are classified as high-risk.
As a result, the CRA has expanded its cryptoasset program, where 35 auditors are currently reviewing over 230 active files.
The agency stated that these efforts have generated approximately $100 million in recovered taxes over the past three years. This, in turn, underscores the magnitude of unreported activity.
Regulatory Gaps Limit Tax Enforcement
Despite these advances, the CRA stated that it still faces major obstacles. The agency notes that Canada’s current laws hinder the reliable identification of taxpayers involved in cryptocurrency activities. Consequently, this hampers its ability to verify the accuracy of income reporting.
Moreover, these legal gaps have constrained enforcement, prompting the CRA to request more comprehensive disclosures from select cryptocurrency platforms.
In particular, the agency targeted Dapper Labs, the Vancouver-based company identified by the government amid concerns that certain users may be engaging in tax evasion.
Dapper Labs Investigation Reduced in Scope
The Canadian Press reported that Dapper Labs did not dispute the inquiry itself. Nevertheless, the company did not fully comply with the initial disclosure requests.
Authorities initially requested information on 18,000 high-volume users. However, after negotiations between company executives, lawyers, and officials, the scope was narrowed to 2,500 accounts.
The outlet also noted that the absence of clear CRA rules limited the responsibility the platform could reasonably be expected to bear.
Jessica Davis, a former FINTRAC official, echoed this complexity. She described the $100 million collected through crypto audits as a notable achievement.
However, she remarked that it is surprising that no criminal charges have been filed against defaulters. The issue takes on added weight considering the well-established history of cryptocurrency in Canada.
Federal Government Plans New Crypto Reporting Law
In response to these enforcement challenges, the federal government has pursued legislative reform. In late October, the Department of Finance announced plans to introduce new reporting laws by Spring 2026 aimed at strengthening oversight of digital-asset activity.
During an announcement on October 20, François-Philippe Champagne, Minister of Finance and National Revenue, emphasized that financial crimes are evolving quickly and require an equally rapid policy response.
He highlighted several initiatives, including a National Anti-Fraud Strategy and the establishment of a dedicated Financial Crimes Agency.
FINTRAC Tightens AML Enforcement
While the CRA works to improve tax compliance, Canada’s anti-money-laundering authority is also intensifying its own efforts.
FINTRAC recently fined Peken Global Ltd., which operates the exchange KuCoin, more than $19.5 million for failing to register as a foreign money services business.
In a separate action, FINTRAC imposed a record-setting penalty of nearly $177 million on Xeltox Enterprises Ltd., a company officially listed as operating out of a Vancouver mailbox rental service.
Ultimately, these enforcement actions reinforce the broader federal initiative to address risks arising in the rapidly growing cryptocurrency landscape.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
