The FCA's Crypto Enforcement Push: What It Tells Canadians About Their Own Rules

The UK’s Financial Conduct Authority spent 2025 doing something regulators had mostly avoided: prosecuting crypto firms for operating outside the perimeter rather than issuing warnings about them. It began legal proceedings against a major global exchange over financial promotions aimed at UK consumers, ran its first operation with partners to disrupt illegal peer-to-peer crypto trading, and set out a new authorisation, supervision and enforcement regime for cryptoasset activities.

This is a UK story. It matters in Canada for one reason: Canada built a very similar perimeter earlier, enforced it earlier, and most Canadian retail users still do not know where it sits. Reading the FCA’s actions as a foreign curiosity misses that the same conduct is already prohibited here.

The two perimeters, side by side

The structures differ in the detail. The consumer-facing conclusion is the same in both countries: a platform that has not gone through the local gateway is operating illegally, whatever its terms of service claim, and the user carries the loss when it fails.

What Canada actually requires of a platform

Two separate registrations, and a platform can hold one without the other.

Securities registration. A platform trading crypto contracts with Canadians must be registered, or operating under a pre-registration undertaking with its principal regulator while an application is reviewed. The enhanced undertakings carry real conditions: custody and segregation standards for client assets, a prohibition on offering margin, credit or leverage to any Canadian client, and a prohibition on allowing clients to buy or deposit stablecoins or the platform’s own proprietary tokens without the CSA’s prior written consent. The CSA publishes a list of platforms authorized to do business with Canadians, and checking a platform against it takes a minute.

FINTRAC registration. Dealing in virtual currency makes a business a money services business, with obligations including client identification and reporting. A large virtual currency transaction report is required when the entity receives virtual currency worth $10,000 or more in a transaction, or in amounts totalling that within 24 hours, filed within five working days.

The leverage prohibition is worth pausing on, because it is the most common reason a Canadian user goes offshore. If a platform is offering you margin on crypto and you are in Canada, that platform is either not registered here or is breaching its undertaking. That is the tell.

What no regulator provides

Neither the FCA regime nor the Canadian one makes crypto safe. It is worth being precise about what is missing, because “regulated” is routinely read as “protected”.

Crypto-assets, including stablecoins, are not eligible for deposit insurance under the CDIC Act, and no federal or provincial deposit insurance plan covers them. Registration imposes custody and segregation standards on a platform. It does not guarantee the assets, insure the balance, or reverse a transaction. If a platform fails, you are a creditor in an insolvency, and how that plays out for tax is examined in lost keys and exchange collapse.

The part that costs Canadians money

Enforcement stories are read as compliance news for firms. For an individual, the consequence is quieter and more expensive: using an unregistered offshore platform creates tax problems that outlive the platform.

Your reporting obligations do not depend on where you traded. The CRA treats crypto-assets as a commodity, every crypto-to-crypto swap is a barter transaction and therefore a disposition, and a Canadian resident reports worldwide income. An offshore venue changes nothing about what is owed.

Records disappear with the venue. A platform that exits the Canadian market, or is shut out of it, takes its transaction history with it. Rebuilding an adjusted cost base from wallet activity alone is expensive when it is possible, and a cost base you cannot substantiate defaults to a worse answer than the true one.

T1135 may apply. Crypto held outside Canada can be specified foreign property, and the threshold is $100,000 of total cost, cumulative across all such property, at any time in the year, rather than market value at year end. The mechanics are in the T1135 guide.

The information gap is closing. Canada is implementing the OECD Crypto-Asset Reporting Framework, with domestic reporting applying to the 2026 and later calendar years and international exchanges of information beginning in 2027. Platform-level data about Canadian users will reach the CRA from partner jurisdictions. Positions built on the assumption that offshore activity is invisible have a defined remaining life. What the CRA already receives is covered in crypto exchange reporting to the CRA.

How to tell a compliant platform from a rogue one

The FCA’s description of the firms it targets translates directly. The markers are behavioural, not technical.

• Guaranteed or fixed returns on a volatile asset. There is no mechanism that produces this honestly.
• Leverage offered to a Canadian retail client. Prohibited under the enhanced pre-registration undertakings.
• No named legal entity, jurisdiction or regulator on the site. Look for the registration, not the security badges.
• Withdrawal friction that appears only when you withdraw. New verification steps, new fees, new holds.
• Pressure to move the conversation off-platform, into a private channel.
• Absence from the CSA’s authorized list with no explanation offered.

Verification is a two-minute task: check the CSA list, then check FINTRAC’s registry. A platform that fails both is not a regulatory technicality, it is the risk itself.

If you are already exposed

1. Export everything now, from every platform and wallet, including internal transfers and swaps. Do it while the accounts still open.
2. Move balances to a platform on the authorized list, and note that the transfer itself may be a disposition depending on what it involves.
3. Reconstruct the adjusted cost base on a weighted average basis in Canadian dollars, using a source you can name.
4. Deal with unreported years before the CRA raises them. The Voluntary Disclosures Program is only available while the disclosure is genuinely voluntary, which it stops being once contact has been made.

The FCA’s enforcement push and Canada’s registration regime are the same message from two directions: the era in which crypto trading sat outside the financial perimeter has ended, and it ended earlier than most retail users noticed. The regulatory risk to an individual was never a fine. It is holding assets on a venue that cannot legally serve you, with records that vanish when it goes.

If you have traded on platforms that are no longer accessible, or you are not confident your cost base would survive a look, reconstructing it properly is far cheaper before a reassessment than after. The Canadian regulatory picture is set out in crypto regulation in Canada.