Canada’s crypto crackdown vacuum is driving talent — and your investment opportunities — out of the country

A quiet revolution is underway among the world’s wealthy. According to The Crypto Wealth Report 2025 by Henley & Partners, almost a quarter of a million people across the globe now hold more than US$1 million in crypto assets (1). Even more astonishing is how fast that wealth grew — with a 40% increase in just 12 months.

While the way these “crypto millionaires” acquired their wealth makes for interesting reading for any investors, it's what they are doing with that money that will have the most impact.

Turns out these newly minted crypto millionaires aren't just diversifiying their portfolio, they’re relocating their wealth. Turns out the preferred locations aren't the celebrity-filled — or financially-rich — locations we're accustomed to reading about. For many, crypto millionaires the destination of choice isn’t New York, London or even Bay Street. It’s Dubai in the United Arab Emirate (UAE), Lisbon in Portugal or Valletta in Malta. The flight of crypto millionnaires includes wealthy Canadians looking to the Persian Gulf or southern Europe to park their digital riches.

Given the digital nature of this asset, the question remains: What would prompt this flight of crypto wealth? The answer lies in a concept that’s reshaping global wealth management: Sovereign arbitrage — the strategic selection of countries based on how they tax, regulate and welcome digital assets.

The global competition for digital wealth

According to data released by Henley & Partners, a global leader in residence and citizenship planning, approximately US$14.4 trillion in wealth crossed borders last year. But it's not just the migration of this asset, but the fact that this capital is moving to jurisdictions where digital assets are clearly defined and lightly taxed. That means traditional offshore centres like Switzerland and the Cayman Islands — offshore havens that once competed on secrecy — are now losing prominance to newer rivals, such as Portugal, Malta and the UAE, who are more competitive when it comes to digital transparency and innovation.

According to Henley & Partners, Portugal has become a poster child for progressive crypto taxation (2). As of 2025, long-term crypto holdings — assets held for more than 365 days — are fully exempt from capital gains tax. Non-fungible tokens (NFTs) and crypto-to-crypto transactions also enjoy preferential treatment under the country’s evolving digital-asset framework.

The United Arab Emirates, particularly Dubai, has doubled down on its ambition to be a global crypto hub. The UAE’s Virtual Assets Regulatory Authority (VARA) oversees a comprehensive licensing framework while maintaining 0% tax on capital gains and salary earnings — a combination few other jurisdictions can match.

Malta, often dubbed “Blockchain Island" (3), remains a trailblazer in European crypto regulation. It was among the first European Union (EU) countries to issue comprehensive crypto-licensing frameworks and Malta continues to attract digital entrepreneurs through its investment migration programs (which provide residency rights alongside regulatory certainty).

Group Head of Private Clients at Henley & Partners, Dominic Volek, notes that this competition represents “a shift from tax secrecy to regulatory clarity” (4). In other words, crypto wealth is now chasing certainty, not concealment.

Sponsored

Smart investing starts here

Build your own investment portfolio with CIBC Investor’s Edge online and mobile trading platform. Enjoy low commissions on trades and special pricing for active traders, students and young investors.

Get started today

Canada’s crossroads

While Canada ranks eighth globally on the Henley Crypto Adoption Index 2025 (5), behind Singapore, Hong Kong, the U.S. and Switzerland, its policy stance remains cautious.

Under current CRA rules, cryptocurrencies are taxed as commodities, not currencies. Gains from trading are considered business income if the investor trades frequently, while occasional investors pay capital gains tax. But ambiguity persists around newer areas like staking, mining and decentralized finance (DeFi) yields.

As an OECD report states (6): "Tax policy can contribute to improving transparency and certainty in the virtual currency space. Clear tax rules means that it will be easier to encourage and monitorcompliance and reporting, allowing countries to access more information on transactions and helping them detect illegal activities. Adopting an efficient and adequate taxation framework also helps to improve certainty and minimise costs for investors, individuals and businesses by acknowledging their activities and establishing clear tax liabilities and treatments."

Uncertainty has real consequences. With no clear framework for AI-driven trading bots, tokenized real estate or yield-farming returns, Canada risks losing both talent and taxable income to friendlier jurisdictions. On the flipside, there's also a risk of greater financial losses — both from institutional as well as Main Street money. As the Bank of Canada identified in a 2022 report (7): "Cryptoasset markets continue to evolve and grow rapidly, and price volatility remains high. While they do not yet pose a systemic risk to the Canadian financial system, the lack of a regulatory framework means they operate without many of the safeguards that exist in the traditional financial system. This exposes investors to risks such as large and sudden financial losses due to fraud, price declines or a run on stablecoins."

The migration of capital and people

The Digital Offshore report (8) highlights how this ambiguity has accelerated residency-by-investment (RBI) applications from digital entrepreneurs seeking “jurisdictional optionality.” These programs, offered by countries such as the UAE, Malta, and Antigua, allow investors to secure legal residency in exchange for investments in property, bonds, or national development funds. While the motivations vary, in general it boils down to:

• Access to digital banking infrastructure that can accommodate crypto earnings
• Avoiding double taxation
• Minimizing reporting obligations under OECD’s 2027 Crypto-Asset Reporting Framework (CARF), which will require global exchanges to share user data with tax authorities

And this great migration of crypto assets will only grow over time given that "the same tools multinational corporations used to shift profits across borders are now available to anyone with an internet connection (9).” This democratization of offshore strategy has blurred the line between individual investor and global enterprise. For Canada’s tax system — built around clear definitions of residence and source — it’s presents yet another challenge but this one has no precedent.

Sponsored

Take control of your money with Monarch

Simplify your finances with Monarch, the all-in-one app designed to help you budget, track spending, and hit your goals faster. For a limited time, get 50% off your first year with code WISE50.

Start your free trial today

The policy dilemma

Given the concerns raised about crypto — the money laundering and the risks of losing an under-regulated asset — the question Canada must answer is whether to compete in this global race or stand apart.

The decision of inaction will be costly, experts warn. Crypto’s borderless nature means capital can exit the country faster than regulators can adapt. The Crypto Banking Report 2025 describes a global “inflection point in wealth management,” where traditional banks and governments risk obsolescence if they fail to adapt to blockchain-based finance (10).

Other countries have already drawn their line in the sand. The GENIUS Act and the CLARITY Act in the U.S. have established new standards for digital-asset oversight and institutional participation, helping attract both capital and innovation.

Canada’s challenge is finding balance. Simplifying its tax code for digital assets could boost competitiveness but also invite volatility. The CRA and Department of Finance must weigh the benefits of innovation against the risk of eroding the tax base. As the Henley & Partners report warns: Clamp down too hard, and investors will simply move elsewhere.

The digital reality: Wealth without borders

The shift to borderless finance isn’t theoretical — it’s here. Bitcoin and stablecoins can be held anywhere, transferred instantly, and accessed globally with a 12-word password. The Henley report (11) captures this succinctly: “A Bitcoin wallet exists simultaneously everywhere and nowhere, a Schrödinger’s asset that only materializes when its owner chooses to convert it.”

That makes “location-based” taxation — a cornerstone of the modern fiscal system — deeply outdated. For governments like Canada’s, it means that wealth is now a moving target. For investors, it means unprecedented freedom and responsibility.

What Canadians can do

For everyday investors

If you’re dabbling in crypto, stay compliant and informed. Report your trades, staking income and mining profits to the Canada Revenue Agency (CRA). Keep meticulous records. And be aware that foreign exchanges may soon share transaction data automatically under the OECD’s CARF system.

But also, understand your options. Residency and citizenship-by-investment programs — once seen as niche — are increasingly tools for diversifying geopolitical and tax exposure.

For policymakers and institutions

Canada has an opportunity to lead by example. It can develop clear, innovation-friendly tax guidelines for digital assets, rather than forcing entrepreneurs to look abroad. Encouraging blockchain innovation within a regulated framework could attract investment, retain talent, and prevent capital flight.

As Mike Foy wrote in Crypto Banking 2025 (12), “Missing this momentum could mean missing out on the infrastructure that will secure, grow, and transfer wealth going forward.”

Bottom line

Crypto has made geography optional — and capital mobile. As countries from Lisbon to Dubai open their doors to digital wealth, Canada faces a pivotal choice: Modernize or marginalize.

The Digital Offshore era isn’t waiting for anyone. Investors have already moved. Now, it’s up to Canada’s policymakers to decide whether they want to compete — or watch the wealth flow away.

Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Henley & Partners: The Crypto Wealth Report 2025 (1, 2, 3, 9, 10, 11); Henley & Partners: The Digital Offshore and the Future of Cross-Border Wealth (4, 8); Henley & Partners: The Henley Crypto Adoption Index 2025 (5); OECD: Taxing Virtual Currencies (6); Bank of Canada (7); Henley & Partners: Crypto Banking: The New Ultra-High-Net-Worth Infrastructure (12)