Every cryptocurrency disposition or transaction creates a TAXABLE EVENT. Whether buying, selling or trading, any gains or losses that result are taxable.
Canada bans trading of crypto on margin and stablecoins. Regulator moved very swiftly; two months after the FTX implosion to protect Canadians from losing all or most of their life's savings.
Key Takeaways
Canadian regulators are moving quickly to protect crypto investors’ savings in the wake of the FTX and Luna/Terra collapse in 2022 where many vulnerable investors have lost their life’s savings. Shame on scammers who prey on those who are retired and vulnerable and stealing their life’s savings.
To reduce the attack surface, Crypto trading platforms have 30 days to assure regulators they’re following some specific rules in order to keep serving Canadian clients. Among the rules are:
If a crypto trading platform doesn’t provide an official “pre-registration undertaking” to follow the rules within 30 days, they’re expected to wind up their Canadian clients’ accounts, and block Canadians from accessing their services.
Canadians looking to get on crypto, it is advised that they use ONLY registered platforms. Here are the ones that are safe, as of this article’s publication:
“These are time-honoured principles of securities regulation, so if a registered investment dealer … is going to hold customer assets, they have to safeguard them with appropriate controls and act like they’re customers’ property and not their own,” said Grant Vingoe, Ontario Securities Commission CEO. “Investors who are using the services of these platforms are entitled to know that if something goes wrong, they can get their assets back and that those assets … aren’t going to be lost in a bankruptcy proceeding.”
Vingoe said the new rules on stablecoins are needed because they’re not as stable in value as advertised and there’s often a lack of transparency over exactly how they’re issued and run. Vingoe is right. We have learned the hard way about the collapse of the Luna-Terra collapse.
The basic idea is that those who wrote the code, run the risk of having all kinds of backdoors. The backdoor gives the founder and original developers the ability to:
Binance is banned from Canada. However, many Canadians still do business with them. The risk is that it will be hard to convert they money back into FIAT (i.e., Canadian Dollars).
When the exchange lacks transparency, and is running from regulators, there is a high risk, that the exchange will implode like FTX – large or small. The largest exchange in the world, Binance, is certainly still in business. However, its lack of transparency and regulatory oversight makes it very risky to do business with.
An unregulated exchange, and if it mints its own crypto coins, there is a very high probability that it will take your deposits and use them for
The company many not have sufficient and robust internal controls because they may not even have any accounting software. FTX ran on QuickBooks Online; large companies which are worth billions of dollars and hold their customers’ deposit run on robust ERP and accounting software solutions – not QuickBooks Online.
Make sure you do your homework. Do not blindly follow how others have become rich for they have already cashed out before you jumped onboard.
Source: Toronto Star: https://www.thestar.com/business/2023/02/22/crypto-crackdown-canada-tightens-rules-on-cryptocurrency-trading-platforms-in-wake-of-ftx-collapse.html
Canada crypto tax is triggered whenever a taxable crypto transaction of any type. Tax due is calculated whether it is a capital gain or business income. How much tax is due is dependent on each individual scenario.
Crypto myth: Currently, there are over 19,000 crypto security tokens. DeFi and Web3 seem to be all the rage. It attempts to displace and dislodge the current banking system. The current system has been around since World War I due to the ascension of the United State Dollar as the world’s reserve currency.
Cryptocurrency tax: Founded in 2016, our firm has since helped clients across the country to answer questions about buying, investing in and selling cryptocurrencies.
For many years, crypto taxes and trading crypto has, for many, been the land of the free. Literally. Governments around the world are starting or have crypto banned, regulated or legalized. In Canada, this is not the exception. Since 2016, the Canada Revenue Agency (CRA) has had rules around crypto how to tax currency.
Stablecoins are cryptocurrencies, in which the value of which is pegged, or tied, to that of another currency, commodity or financial instrument. In other words, Stablecoins are intended to be — and largely have been — less susceptible to volatility because they are backed by another asset. Theoretically, they serve as a safe-harbour to the daily fluctuations of all other cryptos like Bitcoin (BTC) or Ethereum (ETH)
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Forte Innovations is a provider of back-office services, including bookkeeping, controller services, and CFO services in Canada. We are not a public accounting firm and does not provide services that would require a license to practice public accountancy.
