CRA Flags 40% of Canadian Crypto Users for Tax Risks
- CRA says 40% of Canadian crypto users show tax non-compliance risks as audits intensify.
- Court order forcing Dapper Labs to share user data reflects rising enforcement pressure.
- FINTRAC penalties and planned 2026 laws show Canada’s broader digital asset crackdown.
Canada’s tax authority identified a rise in crypto-related tax risks after a new report showed 40% of Canadian crypto users failed to file taxes or faced high non-compliance risk. The claims surfaced as the Canada Revenue Agency (CRA) expanded audits across the country, collecting over $100 million CAD in three years. The agency said legal gaps and anonymous digital platforms hinder the rapid detection of attempts by firms such as Dapper Labs to access user information.
CRA Expands Crypto Audits
The CRA increased its scrutiny through a 35-person cryptoasset audit team now handling more than 230 active files. These audits generated more than $100 million CAD, yet the agency noted that enforcement remained difficult because crypto platforms allow anonymous accounts and cross-border activity.
This challenge helped explain why no criminal charges emerged from five digital-asset investigations opened since 2020. The agency’s top crypto auditor, Predrag Mizdrak, said in an affidavit that the CRA struggled to identify crypto users accurately because transaction structures obscured identities.
He said the agency saw frequent delays because investigators needed international assistance and large volumes of blockchain data. This difficulty, he added, grew during the COVID-19 pandemic when crypto activity rose.
These constraints pushed the CRA toward stronger court tools. Mizdrak said the agency viewed unnamed persons as essential because many users did not report gains. This led the CRA to target specific platforms for more information.
Challenges in Securing User Data
The CRA secured a Federal Court order for customer information from Vancouver-based Dapper Labs, which operates NFT platforms and its own blockchain. The agency initially requested data on 18,000 users, but negotiations with Dapper’s lawyers reduced the number to 2,500. The firm did not oppose the request, and the court approved the narrowed disclosure for compliance checks.
This order represented the second unnamed person’s requirement (UPR) ever issued against a Canadian crypto business. The first targeted Toronto-based Coinsquare nearly five years earlier. The CRA said it continued to review taxpayers linked to the Coinsquare order, but it did not release a final estimate of resulting reassessments.
However, court filings suggested Dapper Labs faced scrutiny largely because the government believed some users relied on digital wallets to mask taxable income. The CRA said it viewed these disclosures as central to understanding underground crypto activity, which it believed contributed to rising non-compliance. The agency said 15% of crypto users failed to file taxes entirely, while another 30% fell into high-risk categories.
Related: Canada Moves to Regulate Stablecoins Under 2025 Budget Plan
Growing Regulatory Pressure
Canada’s Department of Finance announced plans in late October to introduce new legislation by spring 2026. Minister François-Philippe Champagne said the government needed updated laws because financial crime evolved faster than traditional enforcement methods.
He said the upcoming rules would give investigators new tools and support a planned financial crimes agency. Meanwhile, Canada’s anti-money laundering agency, FINTRAC, increased its penalties on crypto firms.
It fined Seychelles-based Peken Global Ltd., operating as KuCoin, more than $19.5 million CAD for failing to register as a foreign money services business. FINTRAC also issued a record $177 million CAD penalty against Xeltox Enterprises Ltd. and fined Binance $6 million CAD in a separate action last year.
These steps showed Canada’s broader effort to police digital assets beyond tax compliance. However, experts said enforcement still faced serious limits. Jessica Davis, president of Insight Threat Intelligence and a former FINTRAC official, said resource demands often pulled investigators away from financial crime cases. She said penalties showed progress but noted that enforcement lagged behind regulatory developments.
The CRA’s findings showed widespread tax non-compliance among crypto users driven by anonymity and cross-border platforms. The agency increased audits, obtained court orders, and collected over $100 million CAD, yet it still faced obstacles when identifying users. Canada now prepares new financial crime laws as authorities continue imposing high-value penalties and detailed audits across the crypto sector.
