BREAKING: Canada’s Crypto Crackdown - Political Donations Banned Over Traceability Fears
The Canadian government has issued a stark warning to the cryptocurrency sector, implementing an immediate ban on all crypto donations within federal politics through newly tabled Bill C-25. The legislation—dubbed the Strong and Free Elections Act—classifies digital assets alongside money orders and prepaid cards as 'difficult-to-trace' payment methods, delivering a regulatory shock that could trigger a 10% correction in politically-linked crypto projects. Government House Leader Steven MacKinnon confirmed the sweeping restrictions apply to registered parties, riding associations, candidates, and third-party advertisers, citing recommendations from the foreign interference inquiry and election officials.
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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