Canada cracks down on crypto donations over traceability concerns

Canada’s federal government has introduced legislation that would prohibit cryptocurrency donations to political parties, candidates, and third-party election advertisers, effectively closing a fundraising channel that has seen almost no use since it was allowed in 2019.

Bill C-25, known as the Strong and Free Elections Act, was recently tabled by Government House Leader Steven MacKinnon. The bill classifies crypto alongside money orders and prepaid cards, payment methods considered difficult to trace, and would ban all three across Canada’s federal political system. 

The restrictions would apply to registered parties, riding associations, candidates, leadership and nomination contestants, and third parties involved in election advertising.

“These targeted priority amendments address recommendations from the public inquiry into foreign interference in the federal electoral process and democratic institutions, and also from the chief electoral officer and the commissioner of Canada elections,” MacKinnon said. 

Canada’s ban on cryptocurrency donations comes amid a broader crackdown on financial crime, with the country’s watchdog revoking 47 crypto-related money services businesses (MSBs) registrations since the start of the year for anti-money laundering violations.

So far, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has revoked a total of 50 MSB registrations, including 23 in its most recent enforcement action.

Finance Minister François-Philippe Champagne said the crackdown marks “a significantly increased pace of action”. Moreover, he pledged that the government will maintain this momentum as it targets money laundering and fraud risks.

The minister also noted that authorities will keep monitoring and pursuing new measures for virtual currency businesses, including cryptocurrency MSBs and crypto ATMs, which officials say can be used to facilitate illicit finance.

Still linked to the crypto crackdown, Canadian securities regulators dismantled more than 3,000 fraudulent investment and cryptocurrency websites as part of a coordinated national drive to tackle online financial crime.

Canada pushes toward a full crypto donation ban after years of limited use

Canada first allowed cryptocurrency donations in 2019 and treats them as non-monetary contributions, just as it treats property donations. However, no major party ever made public crypto donations, and none of them were made public before the 2021 and 2025 federal elections. Crypto donations were not eligible for tax receipts, so they are not popular among most donors under this tax reform bill, which tends to result in most taxpayers receiving a tax refund.

Initially, Chief Electoral Officer Stéphane Perrault favoured regulation but not a ban. In a June 2022 report after the election, his office advised reporting and receiving all contributions from crypto because it could never distinguish between larger contributions (as little as CAD 200) made by a single person. By November 2024, Perrault favoured a complete ban due to Crypto’s anonymity and the difficulty of identifying its real participants.

Bill C-25 is Canada’s second attempt at a ban. Bill C-65 had similar provisions, but the bill lapsed when Parliament was prorogued in January 2025 and was passed this month. The new Bill has passed its first reading and requires committee approval, Senate approval, and royal assent before it becomes law.

Recipients of banned crypto donations would have 30 days to return, destroy, or convert and return the coins to the Receiver General. Administrative penalties could reach up to twice the donation’s value. Maximum fines for individuals would rise from CAD $1,500 to CAD $25,000, and organizational fines from CAD $5,000 to CAD $100,000.

Canada and the UK tighten crypto donation rules as the US takes a different path

Canada’s action came a day after Prime Minister Keir Starmer of England imposed a moratorium on crypto donations to British political parties in the name of illicit finance and foreign interference. 

Cross-party pressure on British politicians, in particular were also growing after parliamentary committees described crypto donations as “unacceptably high risk.”

For now, cryptocurrency contributions in the United States are allowed. Since the Federal Election Commission issued its guidance in 2014, crypto-backed super PACs have become a significant part of US politics. 

The crypto industry spent over $190 million in the 2024 election cycle, with Fairshake (a super PAC) attracting the most investors, raising over $200 million. A few US states have limits yet, but at this point, the federal ban doesn’t exist.

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