Cryptolicense in Canada: Open New Business Gates

Canada is the first country in the world to classify cryptocurrency platforms as “money service businesses” (MSB) in the context of financial regulation. From 2014, the country implemented laws prohibiting money laundering and terrorist financing.   

Companies dealing with virtual currencies should register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and comply with legal requirements.

At the moment, this country is a developed and respectable jurisdiction with relatively loyal tax rates. That is why Canada has been chosen by companies such as: Newton, NDAXBitBuy, Wealthsimple Crypto, Coinberry, Crypto.com, Coinsquare, Coinsmart.

Canada became an innovator in VASP legal reforms and obtained a status of a developed and respectable jurisdiction

Key Numbers about Cryptolicense in Canada

12 weeks

average term of starting new project

15%

federal corporate income tax (CIT) rate

no

minimal contribution for share capital

0%

withholding Tax (WHT) rate for residents

no

application fee for MSB License

33%

federal personal income tax (PIT) top rate

Legal Opinion about Cryptolicense in Canada

Ganna Voievodina

Manimama, CEO

"For businesses operating in the Canadian financial sector, obtaining an MSB License is essential. This license ensures regulatory compliance, facilitates entry into the North American market, and promotes operational efficiency. Startups and established businesses alike benefit from the stability and opportunities it provides. Let our legal experts guide you through the MSB licensing process, ensuring your success within the Canadian financial landscape. Contact us today to begin your application".

Types of Activities with a License

Foreign exchange dealing: carrying out operations on exchange of one type of currency for another (for example, USD to CAD exchange).

Issuing or redeeming money orders, traveller's cheques or anything similar: your business issues or redeems money orders, travellers' cheques or other similar negotiable instruments.

Crowdfunding platform services: the provision and maintenance of a crowdfunding platform for use by other persons or entities to raise funds or virtual currency for themselves or for persons or entities specified by them.

Remitting or transmitting funds: remitting or transmitting from one person or entity to another using an electronic funds transfer network or any other method such as Hawala, Hundi, Fei ch'ien, and Chitti.

Dealing in virtual currency: this includes both virtual currency exchange and virtual currency transfer services. Virtual currency exchange services include exchanging: funds for virtual currency, virtual currency for funds, or virtual currency for another virtual currency. Virtual currency transfer services include: transferring virtual currency at the request of a client, or receiving a transfer of virtual currency for remittance to a beneficiary.

Choose the Package of Services

Advanced

With registering a company in Canada

€15,000

  • Legal support within the process of obtaining the MSB license
  • Company formation in Canada
  • Company name of your choice
  • Individual business plan with 3 scenario
  • Individual AML/KYC policies
  • Registration of the activities within FINTRAC
  • Corporate documents
  • Handling the communication with FINTRAC
  • Local Anti-Money Laundering officer
  • Local virtual office for one year
Order now

Basic

Getting the MSB license on the already operating company in foreign country (FSMB License)

€10,000

  • Legal support within the process of obtaining the MSB license
  • Standart AML/KYC policies
  • Registration of the activities within FINTRAC
Order now

Connect with our experts

By clicking the button, I confirm that I have read the privacy policy and consent to the collection and processing of my personal data in accordance with the GDPR rules.

Our Experts in this Area

Step by Step Description

Step 1. Planning and strategizing

At this stage, you need to decide on the purpose of incorporating companies and services that our team will provide. We will inform the client about:

  • optimally paid up share capital
  • corporate structure
  • applicable laws and regulations
  • the application procedure and the types of activities that must be licensed based on the business model
It is possible to get the MSB license for a non-Canadian company what can open the developed canadian market to the foreign VASP without obligation to create the company in Canada

Step 2. Registration of the company

Once all steps in Step 1 are completed, you can apply to register your company with the Canadian Company Registry. As a result of successful registration, the client will receive:

  • registration certificate
  • memorandum and articles of association
  • other corporate documents

Step 3. Obtaining a business number and registering with the tax office

  • Obtaining a business number is subject to guidelines from the Canadian Revenue Agency. Having obtained a business number and appropriate licenses (if applicable), the company must be registered with the Canadian Revenue Office, as all companies in Canada are subject to accounting and tax obligations

Step 4. MSB license obtaining

  • We will prepare a business plan for three years and draft mandatory procedures and policies that licensed companies must have. These are anti-money laundering policies, risk assessment procedures, internal control and audit rules. It will also be necessary to hire a specialist responsible for compliance and financial monitoring, since his candidacy will needs to be agreed with FINTRAC

Step 5. Preparation for opening bank and trading accounts, drafting the documentation

  • Once the above steps are completed, you need to prepare all the necessary documents for the company's website, including the terms of service, privacy policy and other documentation, without which it is virtually impossible to do business and open accounts. We also can provide services for payment, trading and exchange accounts, as well as any additional legal services that a client needs

Understanding Canadian Requirements

MSB status is a must before performing actions with cryptocurrency

Enterprises that have MSB status are required to obtain permission from FINTRAC and fulfill a number of obligations, such as:

  • submit reports to FINTRAC
  • keep accounting
  • KYC and compliance

An MSB is an individual or legal entity with a place of business in Canada that provides at least one of the following services:

  • operations with foreign currency, i.е. conducting transactions in which one type of currency is exchanged for another
  • transfers of funds, including between individuals, legal entities, including through the network of electronic money transfers, i.e. transfer of funds from one person or entity to another using an electronic money transfer network or any other method such as Hawala, Hundi, Fei Chien, Chitti
  • issuance or redemption of cash and traveler's checks or other similar negotiable instruments, with the exception of checks payable to a specified individual or legal entity
  • operations with virtual currencies, i.e. virtual currency exchange and virtual currency transfer services

Requirements for MSB in Canada

A MSB license in Canada requires at least one shareholder, compliance officer and adherence to AML/KYC regulations

To get a MSB license and operate in Canada, some compulsory requirements must be met:

  • a detailed business plan
  • necessary AML/CTF policies
  • no minimum authorized capital requirements
  • passport, address, founder's CV (Canada is not a signatory to the Hague Convention, so foreign document legalization is necessary);
  • no requirements for a local director
  • a compliance officer, who can be located outside of Canada (additional service for providing a compliance officer is possible);
  • preparation of founding documents, memorandum, and articles of incorporation

Taxation in Canada

In Canada virtual assets are taxed at the federal and provincial level, all transaction’s income from cryptocurrencies must be reported

Corporate Income Tax (CIT):
  • Rate: 15% federal, plus provincial/territorial rates ranging from 8% to 16% (not deductible for federal CIT purposes). Combined rates range from 23% to 31%
  • Who pays: resident and non-resident corporations carrying on business in Canada
  • Taxable income: profits earned from business activities in Canada
  • Filing deadline: six months after the company's taxation year end
  • Payment deadline: instalments throughout the year, final payment six months after year end
Withholding Tax (WHT):
  • Rate: varies depending on the type of payment and recipient's residency. Generally 25% for non-residents, but can be reduced by tax treaties
  • Who pays: payers of certain types of income to non-residents, such as royalties, dividends, and interest
  • Filing and payment deadline: Generally, within 15 days of the payment date
Capital Gains Tax (CGT):
  • Rate: 50% of capital gain included in income and taxed at regular income tax rates (individual or corporate)
  • Who pays: individuals and corporations disposing of "taxable Canadian property," including real estate, business assets, and some shares
  • Holding period: no requirement
  • Filing deadline: same as income tax return due date (April 30 for individuals, six months after year end for corporations)

Client Feedbacks

"Manimama OU is perfect partner. Reliability and quality - all of them and more we experienced while was obtaining MSB License".

"Manimama OU is a great law firm. We did not expect the Canadian MSB will be so easy for us".

"Manimama OU made the crypto licensing process surprisingly smooth. Their efficient and knowledgeable team simplified everything for our crypto exchange".

Our Latest Legal Researches

How to obtain a cryptocurrency license in Slovakia

Tax Summary: What law/s governs VASP activities? What activities are included in VASP services? According to Article 5 of the Anti-Money Laundering Law, VASPs are classified as follows: However, this act does not define the activities carried out by these categories of VASPs. Who is the VASP regulator? What is the procedure for registering a…

May / 16 / 2024
Read more

Analysis and description of the Lithuanian AML Law in the Ukrainian version

Dear Friends! We at Manimama Legal and Growth Agency decided to prepare a full analysis and description of the Anti-Money Laundering Law (AML) of Lithuania as the main jurisdiction where our clients register VASP companies. We enclose the document in Ukrainian so that our Ukrainian-speaking clients can fully understand what is given in the basic…

May / 14 / 2024
Read more

How to obtain a cryptocurrency license in Romania

Tax Summary: What law/s governs VASP activities? What activities are included in VASP services? According to Clause 2(t) of Article 2 and Clause 1(g) of Article 5 of the AML Law, as well as the Amendment Ordinance, the types of VASP activities are as follows: Who is the VASP regulator? What is the procedure for…

May / 09 / 2024
Read more

Contact Us

If our proposal is intriguing, we kindly request to complete the form provided below to learn more. By doing so, we guarantee access to a comprehensive commercial personalized offer, featuring up-to-date prices and detailed information.

We look forward to the opportunity of collaborating and delivering exceptional solutions that meet and exceed expectations of any Client.

The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.