Obtaining a Money Services Business (MSB) License in Canada provides businesses with a secure and compliant framework to operate in the country’s growing digital finance market. An MSB license allows companies to offer a range of financial services, including cryptocurrency exchanges, digital wallets, remittance services, and currency conversion. Licensed entities must comply with stringent anti-money laundering (AML) and counter-terrorism financing (CTF) requirements set by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), ensuring a secure and transparent operating environment.

One of the key advantages of an MSB license in Canada is the ability to access a mature and sophisticated financial market. Canada’s tech-savvy population, coupled with a high rate of cryptocurrency adoption, creates significant demand for regulated digital asset services. By securing an MSB license, businesses can build trust with customers and partners while offering compliant and secure financial solutions tailored to both retail and institutional clients.

Canada’s regulatory framework is designed to encourage innovation while maintaining financial integrity. The licensing process is straightforward, allowing businesses to focus on growth and scalability rather than navigating complex bureaucratic hurdles. Additionally, Canada’s clear guidelines on digital assets provide legal certainty, enabling licensed MSBs to operate with confidence in a rapidly evolving market.

Furthermore, Canada’s strategic location and economic stability make it an ideal base for companies looking to expand into North America. With financial passporting opportunities and strong trade relations with the United States, licensed MSBs in Canada can seamlessly access cross-border markets. This advantage, combined with a supportive fintech ecosystem and a growing community of blockchain enthusiasts, positions Canada as a leading destination for digital finance innovation.

Starting in September 2025, the Bank of Canada (BoC) will become the new regulatory authority for certain types of Money Services Businesses (MSBs), particularly those dealing in payment service provision and virtual currencies. This change is part of the federal implementation of the Retail Payments Activities Act (RPAA), which seeks to modernize and strengthen regulatory oversight of retail payment service providers operating in Canada.

This transition will bring enhanced regulatory clarity, updated operational and reporting standards, and a stronger emphasis on consumer protection, financial transparency, and institutional trust. While this represents a step forward in aligning Canada’s financial regulatory environment with global standards, it also introduces new compliance obligations and timelines that MSBs must be ready to meet.

MSB Requirements

• Must be registered within FINTRAC.
• Must comply and adhere to AML/CTF policies, risk control, and monitoring rules, and must have a compliance officer responsible for developing and complying with AML/CTF.
• 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 his/her country of citizenship.
• Must monitor suspicious transactions and report information to the appropriate government agencies.
• Physical office in Canada.
• At least one director with economic experience must be appointed to the company.
  

Canadian Payment Service Providers: RPAA Registration Requirements

Most Canadian companies offering payment services are required to register under the Retail Payments Activities Act (RPAA), with a few exceptions. Common business models that typically require registration include:

• Payment Service Providers
• Account Providers (e.g., holding client funds)
• Remittance Companies
• Multi-Currency Account Providers
• Payment Gateway Providers
• Merchant Account Providers

If your business model falls into any of these categories, compliance with the RPAA is mandatory.



**Understanding these requirements is essential for ensuring your business operates in full compliance with Canadian regulations.**

Crypto Regulation in Canada:

• State fee for application - None
• Required share capital - No minimum
• Corporate income tax - 2-12%
• Annual supervision fee - None
• Local staff member - Not required, but recommended
• Physical office - Required
• Accounting audit - Not required
• Bank account options - European EMIs and we can easily open CAD account

Tax laws in Canada:

Cryptocurrency has the status of an asset. Therefore virtual currency transactions are subject to the Income Tax Act (ITA).

The rate depends on the annual income: from 15% to 33%.

Cryptocurrency entrepreneurs must consider the tax rates of the province where their company will operate and convert the value of cryptocurrency to CAD for tax purposes to confirm the transaction to the IRS. The province that we recommend is British Columbia.

• Companies registered in British Columbia pay tax only on income generated within British Columbia, and the rate for income received outside of Canada is 0%.
• Corporate income tax is 12% for income over 300,000 CAD, which is one of the lowest rates in all of North America.
• There is an additional tax credit that allows reducing of the tax rate to 2% for income up to 300,000 CAD
• All companies in Canada are also obligated to remit a federal tax of 15%