Wealth has become increasingly borderless, from Swiss vaults to Bitcoin wallets, and the Canada Revenue Agency (CRA) faces challenges in adapting to this shift.
Dominic Volek, Group Head of Private Clients at Henley & Partners, notes that for centuries, wealth was tied to physical locations. However, the introduction of blockchain technology in 2009 by an unknown individual, Satoshi Nakamoto, rendered geographic ties irrelevant.
This transition from traditional banking to digital currencies is reshaping both the movement of wealth across borders and government taxation strategies. The CRA’s biggest hurdle now is not just tax evasion, but the inability to trace wealth.
While digital banking retains a geographic connection, cryptocurrencies eliminate the need for a physical address. A Bitcoin wallet can hold vast sums of money, accessible from anywhere in the world without any geographical constraints.
The Crypto Wealth Report 2025 indicates a significant increase in crypto wealth, with approximately 241,700 individuals holding over $1 million in cryptocurrency, illustrating the growing prominence of digital currencies. In 2024, $14.4 trillion of wealth was transferred globally, and a substantial portion of this no longer involves identifiable financial institutions.
As cryptocurrencies exist beyond traditional jurisdictions, crafting policies around residence-based taxation becomes increasingly complicated. The CRA defines cryptocurrencies as commodities under the Income Tax Act, taxing gains only upon sale or exchange, but many DeFi (decentralized finance) transactions don’t always follow this framework.
The CRA faces an uphill battle as peer-to-peer networks complicate transaction tracking. Heavy-handed regulations could push users to obscure their holdings further, leading to “crypto flight.” Some investors are already relocating assets to countries with favorable tax regulations, emphasizing the need for Canada to modernize its tax policies to accommodate this new era of digital wealth.
