Why Canada’s Crypto Tax Crackdown Has Stalled

A specialized team of Canada Revenue Agency (CRA) cryptoasset auditors has uncovered a significant volume of unpaid taxes, working on more than 200 files and securing over $100 million through audits in the last three years. The CRA warns that as many as 40% of Canadians who use cryptoasset platforms either haven’t filed required tax returns or are considered high risk for non-compliance, yet no criminal charges connected to these crypto investigations have been laid since 2020.

Court documents tied to a Vancouver-based crypto company show the federal government’s efforts to curb tax evasion and illicit financing linked to cryptoassets are constrained by limited enforcement resources and the borderless, often anonymous nature of the digital asset ecosystem.

In September, the CRA applied to Federal Court for an order to identify thousands of customers of Dapper Labs Inc., a prominent non-fungible token (NFT) company that operates its own blockchain and crypto wallets. The agency originally sought information on the company’s top 18,000 users, but negotiations with Dapper and its legal counsel reduced that number to 2,500. This represents only the second time a Canadian court has approved an “unnamed persons requirement” under the Income Tax Act to compel a crypto firm to disclose customer identities for tax compliance purposes.

An affidavit from Predrag Mizdrak, a project leader in the CRA’s digital compliance and audit support division, describes the cryptoasset industry as a significant part of the underground economy. The affidavit says the agency’s engagements with crypto platforms point to “significant non‑compliance” and cites earlier data suggesting about 15% of Canadian users of cryptoasset platforms failed to file taxes on time or at all. Of those who do file, roughly 30% were categorized by the CRA as high risk for non-compliance.

Mizdrak notes the COVID-19 pandemic accelerated cryptoasset use, increasing compliance challenges for the CRA because of the anonymity built into many crypto networks, the large volume of transactions, and how easily accounts can be opened on cross‑border platforms.

Tax agency targets high-risk crypto users

The Federal Court order against Dapper Labs follows a rare legal tool used by the CRA to identify groups of users whose identities are needed to verify tax compliance. Companies subject to unnamed persons requirements are not accused of wrongdoing; the court grants such orders only when the targeted group is ascertainable and disclosure is necessary to pursue tax enforcement.

According to CRA statements, the agency currently maintains a 35-person cryptoasset audit team that has opened more than 230 files. The CRA says its audit work has generated “significant taxes earned by audit,” including roughly $100 million over the past three years. Between 2020 and the first quarter of 2025, five criminal investigations with a “digital asset component” were opened; four remained ongoing as of March, but none have yet resulted in charges.

“CRA criminal investigations are complex and often require years to complete,” the agency told reporters in an emailed statement. The timeline for any investigation depends on complexity, individuals involved, evidence availability, international cooperation, and witness cooperation to determine whether criminal charges are warranted.

Neither Dapper Labs nor its legal representatives responded to requests for comment. The CRA said it continues to address taxpayer non‑compliance uncovered through unnamed persons requirements, but cannot provide a final estimate on the number or value of reassessments that may result.

CRA audits grow alongside major FINTRAC fines

Separately, Canada’s financial intelligence agency FINTRAC has imposed record fines on crypto firms this year for failing to comply with anti‑money‑laundering and counter‑terrorist financing rules. In October, FINTRAC announced a nearly $177 million penalty against Xeltox Enterprises Ltd. and more than $19.5 million against Peken Global Ltd., which operates as KuCoin. Neither firm has physical operations in Canada, but both retained Canadian counsel and are pursuing Federal Court challenges.

Canada regulates well but struggles to enforce

Jessica Davis, president of Insight Threat Intelligence and a former FINTRAC and CSIS analyst, described the $100 million recovered through crypto audits as a “pretty significant haul.” She said it is notable that criminal charges have not followed, given how long cryptoassets have been in use, and suggested it has taken time for tax and enforcement awareness to reach the mainstream.

“People still don’t fully understand that profits from crypto are taxable,” Davis said. While Canada’s regulatory framework is strong and the sector is not lawless, she identified enforcement as the weaker link. Sustaining complex financial crime investigations, laying charges, and demonstrating the effectiveness of enforcement remain difficult, she said, especially when policing resources are stretched and can be redirected to other priorities.

Davis added that public and political pressure to show results on financial crime investigations has not always matched other enforcement priorities, a factor that can affect resourcing decisions for agencies such as the RCMP and federal partners.

Budget pledges oversight, but timelines uncertain

The federal budget includes a commitment to establish a Canadian financial crimes agency by spring 2026, intended to investigate complex money laundering, organized criminal activity and online financial scams, and to recover illicit proceeds. Details on the agency’s mandate and structure remain limited, and observers including Davis say they will wait for concrete plans before judging its potential impact.

The Federal Court’s recent order against Dapper Labs follows an earlier unnamed persons requirement issued against Toronto‑based Coinsquare Ltd. nearly five years ago. The CRA says it continues to pursue non‑compliance identified through these orders, but must still complete its work before providing final estimates of reassessments or recovered amounts.

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