CoinSquare, a Canadian crypto exchange, has announced that it has come to terms with the Canada Revenue Agency (CRA) in regards to the information provided regarding CoinSquare users.
CoinSquare notes that in late 2020, the CRA filed an application in court to compel Coinsquare to hand over clients’ trading data. The CRA stated that it requires this information for tax reporting and compliance purposes.
CoinSquare reports that it has negotiated to “protect our client’s privacy, and limit any disclosure to only what was absolutely required by the CRA under Canadian tax law.” Coinsquare states that it will not provide information on 90% to 95% of their customers. Only accounts holding CDN $20,000 or more as of December 31, from 2014 to 2o20 will be required to submit information. This includes 16,500 of the largest accounts by trading volume.
The agreement and court order legally compel Coinsquare to provide the CRA with the client information by April 6, 2021.
Impacted users will be notified directly by Coinsquare.
Coinsquare stated in a blog post:
Under the Income Tax Act, the CRA has the authority to review and verify that all Canadians have met their ongoing tax obligations. Referencing the CRA’s cryptocurrency guidelines, they have stated ‘any income from transactions involving cryptocurrency is generally treated as business income or as a capital gain, depending on the circumstances. Similarly, if earnings qualify as business income or as a capital gain then any losses are treated as business losses or capital losses.’ We believe this agreement is a partial but significant victory for Coinsquare and the digital asset industry in Canada. We hope that our victory will set a precedent for other companies in the cryptocurrency industry to defend their clients’ privacy and to limit any disclosure to only what is absolutely required under Canada’s tax law.
Coinsquare’s experience is not unique as US-based exchanges are required to forward account information to the tax authorities as well. With the advent of the FATF travel rule, it may be anticipated that many or most crypto exchanges may be required to provide similar information to national authorities.