Virtual currency

How BC law treats it

Virtual currency is regulated, although no single statute covers it. Under the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act, SC 2000, c 17, a business that deals in virtual currency, such as by exchanging it or transferring it for customers, is a money services business. It must register with FINTRAC before operating and must run a compliance program, verify client identity, keep records and report large virtual currency transactions and suspicious transactions. Securities law applies where the activity involves securities or derivatives. The Canadian Securities Administrators have taken the position that platforms holding crypto assets for clients are often dealing in securities or derivatives. Crypto asset trading platforms serving BC residents must register with the BC Securities Commission under the Securities Act, RSBC 1996, c 418, or operate under a pre-registration undertaking while their registration is pending. Since the end of 2024, platforms may offer only stablecoins (value-referenced crypto assets) that meet CSA conditions. Separately, Parliament enacted a federal Stablecoin Act in March 2026, to be supervised by the Bank of Canada, with most of the framework expected to take effect once regulations are made. Tokens sold to raise money for a project can themselves be securities that need a prospectus or an exemption. For tax, the Canada Revenue Agency treats cryptocurrency as a commodity, not money. Under the Income Tax Act, RSC 1985, c 1 (5th Supp), gains are taxed as business income or capital gains depending on the facts, and paying for goods with crypto is a barter transaction. GST and PST can apply to goods and services paid for in crypto just as with cash. Courts treat virtual currency as property that can be owned, held in trust, frozen and traced in fraud cases.

What it means for your business

Any BC business that accepts, exchanges, stores or transfers crypto for others needs to check FINTRAC registration before it starts, because operating an unregistered money services business can lead to penalties and criminal charges. Startups planning a token sale must analyze securities law first. Even a business that only accepts bitcoin for its products must record the fair market value of each payment for tax. Weak custody and key management create real loss and litigation risk. Example: A Vancouver startup plans an app that lets users buy and send bitcoin. Before launch it registers with FINTRAC as a money services business, builds a client identification program, and gets advice on whether its custody of client assets needs BC Securities Commission registration.

Risks and common mistakes

Assuming virtual currency is unregulated in British Columbia. Launching an exchange, wallet or transfer service before registering with FINTRAC as a money services business. Selling tokens to the public without analyzing whether they are securities. Not recording the Canadian dollar value of crypto received or paid, which creates tax reporting gaps. Treating crypto as legal tender or as a bank deposit with deposit insurance.