Over the past decade, cryptocurrencies have evolved from niche digital experiments to a global financial phenomenon, with a market capitalization reaching into the trillions of dollars. Bitcoin, Ethereum, and even meme-inspired tokens like Dogecoin are now widely recognized. Yet, despite their growing influence, the legal status of cryptocurrencies remains ambiguous—particularly in how they are classified and regulated.
In Canada, courts and regulators are actively shaping the legal landscape surrounding digital assets. While no comprehensive federal statute yet defines cryptocurrency, judicial decisions have begun to clarify how these assets are treated under existing legal frameworks. This article explores key Canadian court rulings that reveal the evolving legal treatment of cryptocurrency—ranging from property classification to enforcement in civil and family law.
Understanding Cryptocurrency and Blockchain
At its core, cryptocurrency is a digital or virtual asset secured by cryptography and operating on blockchain technology—a decentralized, distributed ledger that records transactions across a network of computers. Unlike traditional currencies issued by central banks, cryptocurrencies function without intermediaries, enabling peer-to-peer transactions.
This decentralization raises complex legal questions: Is cryptocurrency money? A security? A commodity? Or an entirely new category of property? The answer has significant implications for taxation, regulation, litigation, and enforcement.
Canadian courts have generally avoided definitive categorization but have increasingly treated cryptocurrency as a form of property or digital asset eligible for legal protection and remedies.
Cryptocurrency as Property in Legal Proceedings
Li v. Barber (2022): Digital Funds Are Subject to Court Orders
In Li v. Barber, 2022 ONSC 1176, the Ontario Superior Court of Justice issued a Mareva injunction—a court order freezing assets—to prevent organizers of the “Freedom Convoy” from dissipating funds, including cryptocurrency held in digital wallets.
The court emphasized that digital assets are no different in principle from traditional bank deposits. Just as fiat currency exists as ledger entries in banks, cryptocurrency exists as entries on a blockchain. The judge noted:
“Digital funds are not immune from execution and seizure to satisfy a debt any more than a bank account, provided the individual or institution which can access the funds are within the reach of a court order.”
This decision affirmed that cryptocurrency can be subject to seizure if the holder is under jurisdiction and the asset is traceable.
👉 Discover how digital assets are protected under modern legal frameworks.
Cryptocurrency as a Preservable Digital Asset
Shair.com v Arnold (2018): Preservation of Digital Wallets
In Shair.com Global Digital Services Ltd v Arnold, 2018 BCSC 1512, a former employee used company funds to purchase cryptocurrency but refused to return a laptop containing wallet access after termination. The plaintiff sought a preservation order to secure the digital assets.
The British Columbia Supreme Court recognized cryptocurrency and wallet data as digital assets and granted the preservation order. This case set an early precedent that digital tokens and access credentials are valuable property deserving judicial protection—even in employment disputes.
Cryptocurrency as a Specie of Property
Cicada 137 LLC v. Medjedovic (2021–2022): Hacking and Asset Seizure
In two related rulings (2021 ONSC 8581 and 2022 ONSC 369), the Ontario court addressed allegations that a hacker stole $15 million worth of cryptocurrency. The plaintiff sought an Anton Piller order, allowing search and seizure of digital assets without prior notice.
While the court refrained from definitively classifying cryptocurrency as property, it acknowledged that “people invested value to obtain control of the tokens.” It emphasized that the law must adapt to protect digital economies:
“As this new form of investing and commerce grows, it is fundamentally important... that the integrity of these assets be maintained. The investing public needs assurance that the law applies to protect their rights.”
The court approved transferring seized cryptocurrency to a neutral custodian—demonstrating practical recognition of crypto as seizable property.
Cryptocurrency in Family Law: Division of Assets
M.W. v N.L.M.W. (2021): Crypto as Marital Property
In M.W. v N.L.M.W., 2021 BCSC 1273, the British Columbia Supreme Court included cryptocurrency holdings in the division of family property after divorce. Under the Family Law Act, “family property” includes all assets owned or beneficially owned at separation.
The court did not debate whether cryptocurrency qualified—it simply valued and divided the digital assets like any other property. This pragmatic approach reflects growing judicial acceptance that crypto is a legitimate form of wealth.
Other cases, such as Kostrinsky v Nasri (2022) and M.M.D. v J.A.H. (2019), reinforce this trend. Courts now routinely treat cryptocurrency as intangible but divisible property in family disputes.
👉 Learn how courts are adapting to digital wealth in divorce cases.
When the Nature of Crypto Is Left Undecided
Nelson v Gokturk (2021): Breach of Contract Without Defining Crypto
In Nelson v Gokturk, 2021 BCSC 813, a plaintiff transferred 50 Bitcoin but was not paid. The court ruled for breach of contract but assumed without deciding that cryptocurrency could be subject to conversion (a tort involving wrongful interference with property).
Similarly, in Kik Interactive v AIG (2020), the court avoided ruling on whether Kik’s token was a security—focusing instead on whether the insurer’s policy excluded claims based on such allegations.
These cases show that courts often sidestep theoretical debates to resolve disputes based on existing legal principles—prioritizing practical outcomes over doctrinal clarity.
Key Takeaways: The State of Crypto Law in Canada
Canadian jurisprudence on cryptocurrency remains fluid, but several trends are clear:
- Courts increasingly treat cryptocurrency as property or digital assets.
- Legal remedies like injunctions, preservation orders, and asset seizures apply to crypto.
- Judges adopt a pragmatic approach, focusing on fairness and enforceability rather than rigid classification.
- As crypto integration deepens, more cases will test tax, regulatory, and criminal boundaries.
While no single ruling has declared “cryptocurrency is X,” the cumulative effect is undeniable: the law applies online just as it does offline.
Frequently Asked Questions (FAQ)
Q: Is cryptocurrency legally recognized as property in Canada?
A: While no statute explicitly defines it, Canadian courts have consistently treated cryptocurrency as property in practice—allowing it to be seized, divided, or preserved in legal proceedings.
Q: Can someone lose their cryptocurrency in a divorce?
A: Yes. Courts have included crypto holdings in family property division, assigning value and distributing assets just like real estate or bank accounts.
Q: Can stolen cryptocurrency be recovered through court orders?
A: Yes. Courts have issued Anton Piller orders and Mareva injunctions to seize or freeze crypto assets linked to fraud or theft.
Q: Is buying or holding crypto illegal in Canada?
A: No. Owning and trading cryptocurrency is legal. However, exchanges must comply with anti-money laundering regulations under FINTRAC.
Q: Are crypto transactions taxable in Canada?
A: Yes. The Canada Revenue Agency (CRA) treats crypto as a commodity for tax purposes. Gains from trading or selling are subject to capital gains tax.
Q: Could cryptocurrency be classified as a security in the future?
A: Possibly. Regulatory bodies like the CSA may classify certain tokens as securities depending on their structure and offering—similar to the U.S. SEC’s approach.
👉 Stay updated on how global regulations shape crypto ownership.
Conclusion
Canada’s legal system is adapting to the rise of digital assets with flexibility and pragmatism. While definitive classification lags behind technological innovation, courts are ensuring that cryptocurrency holders are not beyond the reach of justice. Whether in fraud cases, divorce settlements, or contract disputes, the rule of law extends into the blockchain era.
As adoption grows, stakeholders—from investors to legal professionals—must stay informed about how courts interpret rights, risks, and remedies in this evolving space.
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