Gemini's IPO Debut in 2025 Amid Major Financial Losses: An In-Depth Analysis
Gemini, the cryptocurrency exchange founded by the Winklevoss twins, went public in 2025 with losses disclosed in its registration statement. The coverage treated that as a contradiction. It is not: a loss-making company listing is ordinary, and the losses are disclosed precisely because the prospectus regime requires them to be.
The question worth answering is narrower and more useful. What does a loss-making listing in this sector actually tell you, and what changes on your Canadian tax return if you buy the shares?
Why a company lists while losing money
An initial public offering is a financing event, not a certificate of health. Companies list because they need capital or because existing holders need liquidity, and both motives are strongest when internal cash generation is weak. The disclosed loss is not the surprise. The surprise, if there is one, is always in the composition.
Three things are worth separating when you read the filing of any exchange:
Revenue that depends on trading volume. Exchange revenue is largely transaction fees, which move with market activity rather than with the number of customers. A quarter of falling volume can halve revenue without a single account closing. Revenue growth in a bull quarter tells you very little about the next one. That volatility is one reason the larger exchanges have built infrastructure of their own alongside the order book, Coinbase’s Base network being the obvious example.
Costs that do not move with volume. Compliance, custody, audit, licensing and security are largely fixed. An exchange that positions itself as the most regulated in its market has deliberately chosen a higher fixed cost base. That is a defensible strategy and it is also the reason the losses are structural rather than cyclical. Whether it pays off depends on where supervision is heading, and the 2025 Bowman speech is a reasonable read on the American direction.
Where the customer balances sit. For an exchange, customer assets are not the company’s assets. Read how they are held, whether they are segregated, and what the insolvency treatment would be. That distinction has decided the outcome for retail holders in every exchange failure to date.
What actually changes on your Canadian return
This is where most coverage of a foreign listing stops being useful. Buying shares in a US-listed crypto exchange is not the same transaction as buying crypto, and the CRA treats them differently.
| What you hold | Canadian treatment |
|---|---|
| Shares of a US-listed exchange | Capital property. Half of the gain is a taxable capital gain, reported on Schedule 3 and line 12700 |
| Bitcoin or ether directly | Commodity. Every disposition, including a crypto-to-crypto trade, is a taxable event |
| Shares held inside an RRSP | No Canadian tax until withdrawal, and US dividend withholding is generally relieved under the treaty |
| Shares held inside a TFSA | No Canadian tax, but the treaty relief on US dividends does not extend to a TFSA |
| Shares held in a non-registered account, total foreign cost over $100,000 | Form T1135 is required in addition to the normal reporting |
The T1135 threshold is the one that catches people. It is based on the total cost of all your specified foreign property, not the market value, and not the value of any single holding. Add a US-listed position to foreign shares you already own and you can cross $100,000 without any single purchase looking large. The reporting requirement and the penalties for missing it are set out on the CRA’s T1135 page, and the mechanics are covered in the T1135 guide.
Shares held inside an RRSP or a TFSA are not specified foreign property and do not go on a T1135. That is a genuine and often overlooked simplification.
Currency is a real gain, not an accounting detail
You buy in US dollars and you report in Canadian dollars. Your adjusted cost base is the Canadian-dollar equivalent on the acquisition date, and your proceeds are the Canadian-dollar equivalent on the disposition date. A position that is flat in US dollars can produce a taxable capital gain in Canada purely because the exchange rate moved.
Use the Bank of Canada daily rate for the transaction date, or the annual average where the CRA permits it, and use the same method consistently. The inconsistency is what gets questioned, more often than the rate itself.
If you sell at a loss
The reflex after a disappointing listing is to sell, book the loss, and buy back in when it settles. The superficial loss rule interrupts that.
A loss is denied where you, or a person affiliated with you, acquire the same or identical property in the window running from 30 days before the sale to 30 days after it, and still hold it at the end of that period. Affiliated persons include your spouse or common-law partner, a corporation you control, and your own RRSP or TFSA. The CRA’s explanation of the rule is short and worth reading before you place the trade.
The denied loss is not destroyed. It is added to the adjusted cost base of the substituted property, so the benefit is deferred until that position is sold. The exception, and it is a costly one, is a buy-back inside your RRSP or TFSA: the addition goes to the plan’s cost base, where it is worth nothing to you, and the loss is gone for good.
Reading a sector filing without being sold to
A prospectus is a legal document written under liability, so the risk factors are unusually honest and the narrative sections are unusually promotional. Read the risk factors first, then the financial statements, then the narrative, in that order. If a risk factor describes something as reasonably possible that the narrative describes as remote, believe the risk factor.
Apply the same discipline to the regulatory story. A change in US regulatory posture affects the company’s cost base and its addressable market. It does not change how the CRA taxes your shares, which is covered in Canadian crypto regulation, and it does not change whether your own crypto activity sits on capital or business account.
What to do before you buy
Decide, in writing, whether the position is an investment or a trade. That decision drives whether gains are capital or business income, and the CRA looks at your actual conduct rather than your label. Frequency, holding period, financing and the degree of your own expertise all count.
Then check three things: the account it will sit in, whether it pushes your total foreign cost over the T1135 threshold, and whether any foreign tax withheld will be recoverable through the federal foreign tax credit or wasted inside a registered plan. The mechanics of claiming it are in the foreign tax credit.
If you hold US-listed positions across several accounts and have never totalled your foreign cost base, that total is worth confirming before the filing deadline rather than after a T1135 penalty notice.
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