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MSB license in Canada

Support in obtaining an MSB (Money Services Business) license in Canada to run a money services business.

Cryptocurrency regulation in Canada

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As of March 2021, in a public notice by the CSA and IIROC (Canadian Investment Regulatory Organization), Canada has asserted its position in regulating cryptocurrency activity. The government sector ensures that all cryptocurrency exchanges and companies comply with the regulations.

Every entrepreneur must register a company with the Financial Transaction Analysis Center of Canada (FinTRAC). The securities legislation must also apply to cryptocurrency transactions.

The use of virtual currency is not prohibited in Canada, but it is not considered legal tender. Transactions with cryptocurrency are allowed, but it is not possible to pay for state fees, taxes, and charges. The IRS has defined cryptocurrency as a commodity, which acts as a barter transaction in exchange for other goods.

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This activity is governed by basic legal rules:

AML/CFT Act (PCMLTFA Act).

Virtual work companies qualify as Money Service Businesses (MSBs). The Act also applies to exchanges operating outside the country and providing services to individuals and entities in the country.

The Securities Act.

In August 2017, the Canadian Securities Administrators (CSA) passed the CSA Staff Notice 46-307 Cryptocurrency Offerings Act, which regulates the licensing of virtual currency exchanges and transactions.

In addition, virtual currencies are subject to the Canadian provincial Securities Acts:

Bank of Canada's Blockchain Project.

Regulates international payments that use DLT technology.

The type of MSB license you can get in Canada

If you want to open a cryptocurrency business in Canada, an MSB license is required for legal activities.

Companies with this type of license can perform the following financial transactions:

Currency exchange

Allows a firm to exchange crypto for crypto, crypto for FIAT, or vice versa for a commission.

Money transferring

Transfer funds and execute cross border transfers for individuals and businesses alike

Wallet service

License for companies representing cryptocurrency wallets to store cryptocurrency, create encrypted client keys, as well as to store them.

Service packages for registration of MSB license in Canada

Choose the best package of services for obtaining a MSB license in Canada

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FMSB LICENSE

Getting the MSB license on the already operating company in foreign country

€ 9000
Set-up fee
€ 150 /month
Maintenance fee
  • Dedicated consultant with the fully provided individual approach
    hint

    accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels

  • Registration of the activities within FINTRAC
    hint

    submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included

  • Individual AML/KYC Policy
    hint

    preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours

Order now

MSB LICENSE

With registering a company in Canada

€ 12000
Set-up fee
€ 2500 /month
Maintenance fee
  • Dedicated consultant with the fully provided individual approach
    hint

    accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels

  • Full turnkey company formation assistance
    hint

    remote/by physical presence (set up appointments with the notary, sworn translation of the documents, organization of other legal formalities), state duties and the notary fees are included

  • Company name of your choice
    hint

    verification within the Chamber of Commerce and Industry and the Canada Intellectual Property Office.

  • Individual AML/KYC Policy
    hint

    preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours

  • Registration of the activities within FINTRAC
    hint

    submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included

  • Corporate documents
    hint

    Full set of apostilled and sworn translated corporate documents (articles and memorandum of association, registry card, etc.)

  • Corporate account
    hint

    assistance with opening a corporate account under crypto-oriented business B2B and C2B segregated accounts. In case of refusal by the first Financial Institution, we undertake to open a corporate account with another financial institution

  • Handling the communication with Financial Transactions and Reports Analysis Center (FINTRAC)
    hint

    up to 1 hour per month

  • Local Anti-Money Laundering officer
    hint

    with legal or financial background and skills in the compliance area (required by the law for crypto currency exchange and deposit operator) – up to 5 hours per month. Candidate search and employment arrangement is included

  • Local Director
  • Local Office
Order now

MSB LICENSE

With registering a company in Canada and corporate bank account opening

€ 14000
Set-up fee
€ 2500 /month
Maintenance fee
  • Dedicated consultant with the fully provided individual approach
    hint

    accompany with all issues related to the incorporation, Bank account opening, Financial Transactions and Reports Analysis Center (FINTRAC) registration process, answering all the questions over the phone/email/WhatsApp and other connection channels

  • Full turnkey company formation assistance
    hint

    remote/by physical presence (set up appointments with the notary, sworn translation of the documents, organization of other legal formalities), state duties and the notary fees are included

  • Company name of your choice
    hint

    verification within the Chamber of Commerce and Industry and the Canada Intellectual Property Office.

  • Individual AML/KYC Policy
    hint

    preparation of Individual Internal Procedural Rules and Anti-Money Laundering & Compliance Manual to comply with FINTRAC requirements in accordance with the business model of the Client. Provision of recommendations on the further business activities – up to 10 hours

  • Registration of the activities within FINTRAC
    hint

    submission of application and registration within Financial Transactions and Reports Analysis Center (FINTRAC), negotiation with the regulator and full support during the entire process until the registration is accomplished. State duties are included

  • Corporate documents
    hint

    Full set of apostilled and sworn translated corporate documents (articles and memorandum of association, registry card, etc.)

  • Corporate account
    hint

    assistance with opening a corporate account under crypto-oriented business B2B and C2B segregated accounts. In case of refusal by the first Financial Institution, we undertake to open a corporate account with another financial institution

  • Handling the communication with Financial Transactions and Reports Analysis Center (FINTRAC)
    hint

    up to 1 hour per month

  • Local Anti-Money Laundering officer
    hint

    with legal or financial background and skills in the compliance area (required by the law for crypto currency exchange and deposit operator) – up to 5 hours per month. Candidate search and employment arrangement is included

  • Local Director
  • Local Office
Order now
info

It should be noted that AML Officer we are providing is a full-fledged specialist who will participate operating activities in your company for up to 5 working hours per month. Moreover, such employee shall increase sustainability of your business activity in Canada within a long-term perspective.

Process and Timeline

After 8-10 weeks company will be fully registered as a Money Services Business and 2-3 weeks will be required extra to become fully operative and open a Bank account

Stage 1

Collection of documents from the client to start the process

clockup to 2 weeks
Result
Process
Gathering basic information from the client; providing a preliminary set of documents for further execution of the power of attorney; clarity on project scope and budgets.

  • 1.Preliminary project analysis
  • 2.KYC collection and business description
  • 3.AML/CTF policy preparation

Stage 2

Registering a business in Canada

clock4-6 weeks
Result
Process
The company is registered under the approved name; the legal address is registered.

  • 1.Choose a name for the company
  • 2.Rent an office and sign an agreement
  • 3.Determine share capital
  • 4.Prepare a set of corporate documents certified by a notary
  • 5.Appoint employees with financial expertise

Stage 3

Opening a bank account

clock4-5 weeks
Result
Process
A corporate account is opened and the organization complies with the requirements of the tax authorities, as well as the supervisory authority as a provider of virtual assets.

  • 1.Preparation of notarized documents
  • 2.Preliminary talks with the payment institution and the account opening process
  • 3.Payment of share capital

Stage 4

Pre-application work and registration

clockup to 2 weeks
Result
Process
Submitting documents for an MSB license. A functioning company in the legal framework of Canada

  • 1.Preparing and adapting documents for AML/CTF cryptocurrency company operations
  • 2.Search, employment, training, and adaptation of employees
  • 3.Submission of license application
  • 4.Collecting additional documentation as requested by the FinTRAC representative
  • 5.Negotiating with FinTRAC representative
  • 6.Compliance with FinTRAC representative requirements

Stage 5

Registration process (unless a clarification request was sent to the applicant following the submission)

clockup to 4 weeks
Result
Process
Obtaining an MSB licence and the appearance of the company in the registry of licenses

  • 1.Submitting the documents to FINTRAC
  • 2.Leading the Client and conducting negotiations with the regulator and full support during the entire process until the registration is accomplished
Requirments
Advantages
Additional services
Need to open a physical office in Canada
The company must be registered with FinTRAC
Compilation and adherence to AML/CTF policies, risk control, and monitoring rules
The company must comply with client identification, record keeping, and reporting rules
All founders, shareholders, and employees must be in good standing. Companies need to provide the regulator with certificates of non criminal record in the country of citizenship.
Companies must have a compliance officer responsible for developing and complying with AML/CTF.
Entrepreneurs must monitor suspicious transactions and report information to government agencies
At least one director with economic experience must be appointed to the company
No minimal authorized capital
Legalization of cryptocurrency activity in a legal state
Economic and social stability
High level of economic freedom
Reliable banking system
1.5-2 months from application to license
High level of client trust due to high reputation in the cryptocurrency market
Entrance to the large-scale domestic market
Favorable regulatory environment for businesses
Minimal regulatory costs
Develop and apply internal rules for monitoring and collecting information about all clients.
Identify all suspicious transactions with the transfer of information to state authorities (suspicious transactions, large monetary information, etc.).
Enter records of financial transactions.
Train the relevant employees.
Requirments
Opportunities
Additional services
Need to open a physical office in Canada
The company must be registered with FinTRAC
Compilation and adherence to AML/CTF policies, risk control, and monitoring rules
The company must comply with client identification, record keeping, and reporting rules
All founders, shareholders, and employees must be in good standing. Companies need to provide the regulator with certificates of non criminal record in the country of citizenship.
Companies must have a compliance officer responsible for developing and complying with AML/CTF.
Entrepreneurs must monitor suspicious transactions and report information to government agencies
At least one director with economic experience must be appointed to the company
No minimal authorized capital
Legalization of cryptocurrency activity in a legal state
Economic and social stability
High level of economic freedom
Reliable banking system
1.5-2 months from application to license
High level of client trust due to high reputation in the cryptocurrency market
Entrance to the large-scale domestic market
Favorable regulatory environment for businesses
Minimal regulatory costs
Develop and apply internal rules for monitoring and collecting information about all clients.
Identify all suspicious transactions with the transfer of information to state authorities (suspicious transactions, large monetary information, etc.).
Enter records of financial transactions.
Train the relevant employees.

Securities Law

As of 2017, cryptocurrency is regulated as securities. Accordingly, it falls under the "Securities Act", which also includes financial assets, stocks, bonds, ETFs, options, and investments. This sector is regulated by the CSA, the Canadian Securities Administrator.
If a firm wants to obtain a license for cryptocurrency activities in Canada, it can fall under the definition of MSB (Money Service Business). As a result, the cryptocurrency company will comply with federal and state tax requirements.
Cryptocurrency exchanges are regulated similarly to companies that provide money services. They have the same record-keeping and verification obligations as fiat MSBs.
Once the AML/CFT law amendments are approved, all cryptocurrency companies must be registered with FinTRAC.
In March 2021, FinTRAC issued guidance on vetting businesses, individuals, and companies that provide financial services to approve the following amendments:
  • verification of the identity of every individual or entity that pays cash or performs a transaction of $10,000 or more
  • verification of a customer who transfers or exchanges the equivalent of $1,000 in cryptocurrency
  • confirmation of the identity of the company within one month, after receiving information on contracts for the exchange or transfer of digital currency.
  • If the cryptocurrency is received from a government organization or financial institution, an exception is introduced for additional verification of the identity of the organization that received the transaction.
In addition, all cryptocurrencies are required to register cross-border transactions and electronic fund transfers. This process is governed by the Virtual Currency Transfer Rule. This rule means that cross-border cryptocurrency transactions must comply with the same scrutiny and other provisions as the Proceeds of Crime (Money Laundering) Act. This law governs international monetary transactions involving Canadians and the reporting thereof.

Taxation

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Tax laws and standards

The Income Tax Act (ITA) applies to all virtual currency transactions. Cryptocurrency is not defined as an official means of payment but has the status of assets. If a customer pays for a service or commodity with cryptocurrency - this has the status of a profitable (barter) transaction. Such "goods" should be included in the seller's income for tax purposes. Entrepreneurs need to convert the value of the cryptocurrency to CAD to confirm the transaction to the IRS.

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Tax Rate

Cryptocurrency activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%. In addition, it is necessary to consider the provincial tax rate, where the cryptocurrency company will operate.

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Reporting

When profits from cryptocurrency activities are taxed as a profitable business - 100% of earnings are taxed. Only 50% of a company's profits are taxable if capital gains are reported for tax purposes. The Canadian government recommends that entrepreneurs make a regular report. It should include the date of cryptocurrency transactions and the price in Canadian dollars at the time of the transaction.Persons involved in cryptocurrency transactions are required to report any gains or losses from the purchase, exchange, or sale of digital currencies in their declarations.

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Tax laws and standards

The Income Tax Act (ITA) applies to all virtual currency transactions. Cryptocurrency is not defined as an official means of payment but has the status of assets. If a customer pays for a service or commodity with cryptocurrency - this has the status of a profitable (barter) transaction. Such "goods" should be included in the seller's income for tax purposes. Entrepreneurs need to convert the value of the cryptocurrency to CAD to confirm the transaction to the IRS.

diamand

Tax Rate

Cryptocurrency activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%. In addition, it is necessary to consider the provincial tax rate, where the cryptocurrency company will operate.

reward

Reporting

When profits from cryptocurrency activities are taxed as a profitable business - 100% of earnings are taxed. Only 50% of a company's profits are taxable if capital gains are reported for tax purposes. The Canadian government recommends that entrepreneurs make a regular report. It should include the date of cryptocurrency transactions and the price in Canadian dollars at the time of the transaction.Persons involved in cryptocurrency transactions are required to report any gains or losses from the purchase, exchange, or sale of digital currencies in their declarations.

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FinTech lawyers in Canada

Mark Gofaizen

Mark Gofaizen

Position:
Senior Partner, Consultant
Fed Cid

Fed Cid

Position:
Associate, Consultant

TESTIMONIALS

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    Gofaizen & Sherle has successfully implemented all the tasks related to the settlement of legal part (company formation and VASP license application) of our exchange whitebit.com.
    Vladimir Nosov
    CEO
    Whitebit
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    Payeer OÜ is grateful to Gofaizen & Sherle team for their professional personalized approach. We were presented with quick results and efficient replies. For us it was easy and pleasantly to work with the specialists of G&S and we hope for fruitful continuous cooperation.
    Liubov S
    CEO
    Payeer OÜ
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    Working with Gofaizen & Sherle team was a real pleasure. Their high level of professionalism and expertise made our journey through the process of establishing and licensing of our company really easy and time efficient. G&S is a trusted partner for us in any topics related to FinTech business.
    Edward Kost
    CEO
    VULTURE OÜ
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    We are very pleased with the proficiency, expertise and efficiency that the team of Gofaizen & Sherle showed while delivering our project. Their commitment and approach determine the high quality of services they provide. The competence of the legal advisors in the team of G&S made them a trusted long term partner for us.
    Bar El
    CEO
    UAB GetCoins
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    Gofaizen & Sherle has proven itself as a reliable business partner and highly qualified legal advisor. Our cooperation with Gofaizen & Sherle on many projects has been professional and effective. Extensive expertise, meeting deadlines, being responsive and attentive to every issue distinguish the Gofaizen & Sherle team from other firms. We look forward to working with Gofaizen & Sherle again in the future.
    Nikita Tepikin
    Managing Partner
    Legal Kornet
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    The Manimama OU team would like to thank Gofaizen & Sherle for their professionalism and the quality of the work. Gofaizen & Sherle team has provided us with clear and practical legal advice on various issues including creating of the VASPs in Baltic states and other legal advices. Gofaizen & Sherle's knowledge and expertise base are very deep and they understand the complexities and nuances of many really difficult cases. We strongly recommend their services
    Ganna Voievodina
    CEO
    Manimama OÜ
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    At Pilsenga since the very beginning we counted with Gofaizen & Sherle to build our financial institution in 21 days, we started our operations in record time thanks to them, it’s been pleasant to work with them through the rush of building a Financial Institution in record time. They for real understand compliance and crypto businesses!
    Victor Romero
    CEO
    UAB Pilsenga
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    Excellent service! The communication is fast and friendly, we are very satisfied with received comprehensive package of services such as legal consulting, full turnkey crypto company formation in Lithuania, assistance in bank account opening for ’’high risk” business, human resources acquisition etc. Highly recommended!
    Roman Potemkin
    Founder & CEO
    TRASTRA
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    Gofaizen & Sherle are true professionals, everything related local incorporation, business management and financial licenses I know I can trust getting always 100% service, knowledge and value. Good prices and highly valuable service this what makes them as a solid partner.
    Ben Richter
    CEO
    Ventures X
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    Great service and support, and very efficient communication with Maksim and the team. Our company has been successfully created with all the necessary licenses. Highly recommended.
    Thomas Zelias
    CEO
    UAB TalentChain
FAQs about Canadian MSB license
Is crypto legal in Canada?
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No, the only legal currency is banknotes and coins issued by the Bank of Canada. However, the government is supporting cryptocurrency development in the country, it just has "commodity/security" status, which means banks and financial institutions have no control over cryptocurrency.
Do you need a license to trade cryptocurrency in Canada?
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If you want to provide cryptocurrency trading, maintenance, or exchange services, you need an MSB license to legally operate your business.
Is crypto taxed?
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Virtual currency is taxed as capital gains or operating income, depending on how the company earned it. Cryptocurrency activities may fall under the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%.

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