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- CRA collects $100M in crypto audits but faces enforcement challenges.
- Crypto users face non-compliance risks as CRA struggles with enforcement.
- Canada’s anti-money laundering agency takes a more proactive approach.
The Canada Revenue Agency (CRA) has successfully collected over $100 million CAD ($72 million USD) from crypto-related audits over the past three years. Despite this financial success, the CRA has not brought any criminal charges related to cryptocurrency since 2020. This highlights the challenges the agency faces in enforcing tax laws in the fast-paced digital asset world.
The CRA’s crypto audit team, comprising 35 people, has reviewed over 230 cases and found that the crypto sector has a significant amount of non-compliance. The agency states that approximately 40 percent of crypto users do not file taxes, or they risk not fulfilling their tax liabilities.
Nonetheless, the CRA’s crypto auditor admitted that it is tough to effectively detect taxpayers in the crypto arcade and determine their adherence. Cryptocurrencies are decentralized and pseudonymous, making it difficult for the CRA to monitor and collect taxes at a high level.
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Challenges in Tracking Crypto Tax Compliance and Efforts to Obtain User Data
The CRA has attempted to do this by obtaining a court order to obtain vital data in an effort to enhance enforcement. The agency recently obtained a court order to get information about 2,500 users of the company Dapper Labs, which owns NBA Top Shot and CryptoKitties.
The original goal of the CRA was to survey 18,000 users; however, it was subsequently reduced to 2,500 users as a result of an agreement with the company. It is also just the second order of a Canadian crypto company to disseminate such data, the first being in 2020, when the CRA had ordered Coinsquare to do the same.
Efforts to Strengthen Crypto Oversight
Nevertheless, Canada is also taking steps to improve its cryptography regulation. New laws related to stablecoins are under development, and Canada plans to introduce a specialized financial crimes agency by 2026. This agency will target complex financial crimes, including those related to cryptocurrencies.
In contrast to the difficulties faced by the CRA, FINTRAC in Canada, an anti-money laundering authority, has been more proactive. FINTRAC has recently issued a C$176.96 million citation to Cryptomus, equivalent to $126.2 million USD, for anti-money laundering offenses. Moreover, the agency imposed a C$19.5 million ($14.1 million USD) fine on the international cryptocurrency exchange KuCoin, demonstrating a more aggressive stance towards regulating the crypto sector.
Also Read: BitMine Acquires $150M in Ethereum, Aims to Secure 5% of Total Ethereum Supply
