How Do I Report Cryptocurrency on Both Sides of the Border?

By Yarik Yarosh, CPA ·August 21, 2026 ·11 min read

Written by Yarik Yarosh, CPA (US & Canada) August 21, 2026 · FL CPA license AC61704 · CPA Ontario

Every sale, swap, or use of cryptocurrency is a taxable event in both countries. Canada treats crypto as a commodity, so dispositions produce capital gains (50% inclusion rate for gains up to the $250,000 annual threshold, 66.7% above that from June 25, 2024). The US treats it as property under IRS Notice 2014-21, so dispositions produce capital gains taxed at your marginal rate (short-term, held under one year) or at the preferential long-term rate (0%, 15%, or 20% depending on income). The mechanics are similar in shape but different in every detail: the cost basis is tracked in different currencies, the inclusion rates differ, the holding period distinction exists in the US but not Canada, and the reporting forms are completely separate.

The cross-border layer adds FBAR and T1135 reporting on top. A Canadian exchange account held by a US person is a foreign financial account for FBAR purposes. A US exchange account held by a Canadian resident is specified foreign property for T1135 purposes. Both reporting obligations exist independently of whether you traded anything during the year.

✓Key takeaway

Three layers of compliance sit on top of each other. (1) Transaction-level: every disposal needs a gain/loss calculation in both currencies, with different inclusion rates. (2) Account-level: Canadian exchanges go on the FBAR and potentially Form 8938 for US persons; US exchanges go on T1135 for Canadian residents. (3) Timing: the US distinguishes short-term from long-term; Canada does not. Missing any layer creates penalty exposure on one side or the other.

How does Canada tax cryptocurrency?

The CRA treats cryptocurrency as a commodity, not currency. A disposition (sale for fiat, exchange for another crypto, use to purchase goods or services) triggers a capital gain or loss measured in Canadian dollars. The cost basis is the adjusted cost base (ACB) of the particular cryptocurrency, tracked in CAD using the exchange rate on the date of each acquisition.

The ACB method in Canada pools all units of the same cryptocurrency. If you bought 1 BTC for $10,000 CAD in January and 1 BTC for $20,000 CAD in June, your ACB per unit is $15,000 CAD. A sale of 1 BTC in December at $30,000 CAD produces a $15,000 capital gain. The 50% inclusion rate applies on the first $250,000 of net capital gains per year (from the June 25, 2024 change), meaning $7,500 is included in income.

There is no holding period distinction in Canada. Whether you held the asset for one day or five years, the capital gains treatment is the same.

Crypto-to-crypto swaps are taxable in Canada. Converting BTC to ETH is a disposition of BTC at its fair market value in CAD at the time of the swap, and an acquisition of ETH at the same value.

If the activity is frequent enough and has the characteristics of a business (repeated, organized, for the purpose of profit), the CRA may reclassify the gains as business income, which is 100% included rather than 50%. The line between investor and trader is a question of fact, and the CRA has taken the position in guidance that factors like frequency of transactions, period of ownership, and knowledge of the market are all relevant.

Crypto is reported on the T1 as either capital gains (Schedule 3) or business income (T2125). The CRA also asks a direct question on the T1 about virtual currency transactions.

How does the US tax cryptocurrency?

The IRS treats cryptocurrency as property. A disposition triggers a capital gain or loss under the same rules as stock or real estate. The cost basis is tracked in USD, using the fair market value on the date of acquisition.

The US distinguishes between short-term and long-term gains. Property held for one year or less produces short-term capital gains, taxed at ordinary income rates (up to 37%). Property held for more than one year produces long-term capital gains, taxed at 0%, 15%, or 20% depending on total income. The 3.8% net investment income tax (NIIT) may also apply on top.

The US uses specific identification or FIFO (first in, first out) for cost basis, depending on the taxpayer’s election and the exchange’s reporting. Unlike Canada’s pooled ACB, the US allows you to choose which lots you are selling, which can minimize the gain by selecting high-cost-basis lots. If no method is specified, FIFO is the default.

Crypto-to-crypto swaps are taxable in the US as well. There is no like-kind exchange treatment for cryptocurrency (the IRS confirmed this in Notice 2014-21 and the Tax Cuts and Jobs Act narrowed IRC 1031 to real property starting in 2018).

Starting with tax year 2025, crypto exchanges and brokers are required to issue Form 1099-DA for digital asset transactions, under the regulations finalized in 2024 (T.D. 10000). The form reports gross proceeds and, where available, cost basis. Before 2025, reporting was inconsistent, and many exchanges did not issue any tax form.

Crypto is reported on Form 8949 (Sales and Other Dispositions of Capital Assets) and Schedule D of Form 1040.

What about the cost basis in two currencies?

This is the piece that makes cross-border crypto harder than domestic crypto. You need a cost basis in two currencies, and they diverge.

If you bought 1 BTC for $10,000 USD when the exchange rate was 1.35, your Canadian ACB for that unit is $13,500 CAD. Your US cost basis is $10,000 USD. When you sell, you convert the sale proceeds to both currencies at the rate on the sale date. The gain in CAD and the gain in USD will be different numbers, not just because of the conversion, but because the exchange rate moved between acquisition and disposition.

For someone who holds crypto through a move (bought it in Canada, sold it after moving to the US, or vice versa), the departure tax complicates things further. Canada deems a disposition at fair market value on the date of departure. The US does not. So the Canadian cost basis resets at departure, while the US cost basis stays at the original acquisition cost. After the move, the two bases are permanently disconnected.

Tracking this requires a spreadsheet or software that maintains parallel cost bases in CAD and USD for every lot of every cryptocurrency. There is no shortcut.

Do Canadian exchanges go on the FBAR?

Yes, if you are a US person (citizen, green card holder, or US tax resident). A cryptocurrency account at a Canadian exchange (or any foreign exchange) is a foreign financial account for FBAR purposes. If the aggregate value of all your foreign financial accounts (including the exchange account) exceeds $10,000 at any point during the year, you file FinCEN Form 114 listing the account.

The FBAR reports the maximum account value during the year. For a crypto exchange, that is the highest total value of all assets held on the platform at any single point, converted to USD using the Treasury’s end-of-year exchange rate or a reasonable method.

This applies even if you did not trade during the year. Holding crypto on a Canadian exchange is enough to trigger the FBAR if the value threshold is met.

Form 8938 may also apply if the account value exceeds the higher Form 8938 thresholds.

Do US exchanges go on T1135?

Yes, if you are a Canadian tax resident. A cryptocurrency account at a US exchange (or any foreign exchange from Canada’s perspective) is specified foreign property for T1135 purposes. If the total cost amount of your specified foreign property exceeds $100,000 CAD at any time during the year, you file T1135 with your Canadian return.

The T1135 reports the cost amount, not the market value. Your cost amount for crypto on a US exchange is the sum of your ACB for each cryptocurrency held there, in CAD. If you bought $80,000 CAD worth of crypto on a US exchange and the market value grew to $200,000, the cost amount for T1135 purposes is still $80,000.

This applies whether or not you traded during the year.

What about DeFi and self-custody wallets?

Self-custody wallets (hardware wallets, software wallets where you hold the private keys) are not accounts at a financial institution. The FBAR applies to accounts at foreign financial institutions, not to self-custody. So a Canadian hardware wallet holding BTC does not go on the FBAR.

T1135 is broader: it covers specified foreign property, which is not limited to accounts. Whether a self-custody wallet holding crypto on a foreign blockchain constitutes specified foreign property for T1135 purposes is not settled. The CRA has not issued specific guidance on self-custody crypto wallets and T1135. The safer position for a Canadian resident holding significant crypto in self-custody is to include it on T1135, but the reporting obligation is less clear than it is for exchange accounts.

DeFi protocols (staking, lending, liquidity pools) create additional tax events. Staking rewards are generally income when received (business income or investment income depending on the scale). Lending interest is income. Entering and exiting a liquidity pool may trigger dispositions. Each of these events needs a fair market value in both currencies at the time of the event. The volume of micro-transactions in DeFi can make the record-keeping extremely burdensome.

Hypothetical example

A hypothetical with made-up numbers. A Canadian software developer in Calgary holds crypto on three platforms: Coinbase (US exchange), Shakepay (Canadian exchange), and a Ledger hardware wallet.

She moves to Texas in May 2026.

Before the move (January-April): She is a Canadian resident. Her Coinbase account (a US exchange) is specified foreign property. Her cost amount on Coinbase is $120,000 CAD (above the $100,000 threshold), so she files T1135 for 2026. She trades some ETH for BTC on Coinbase in March; the swap is a taxable disposition for Canadian purposes. She reports the capital gain on Schedule 3 of her Canadian T1, calculated using her CAD ACB for the ETH disposed of.

After the move (May-December): She is a US tax resident. Her Shakepay account (a Canadian exchange) is a foreign financial account for FBAR purposes. The maximum value across all her foreign accounts (Shakepay plus any Canadian bank accounts) exceeds $10,000 at some point during the year. She files the FBAR for 2026, listing the Shakepay account. Form 8938 also applies if the Shakepay value plus other foreign assets exceeds $50,000 at year-end (US resident threshold).

Her Ledger wallet: not an FBAR account (no financial institution). Not clearly T1135 property (self-custody, CRA guidance unclear). She includes it on T1135 for the pre-move period as the safer position.

Canada deems a disposition of all her crypto at fair market value on her departure date (departure tax). Her Canadian ACB for each asset resets to the departure FMV. Her US cost basis stays at her original acquisition cost. Going forward, gains calculated for Canada (using the reset ACB) and gains calculated for the US (using the original basis) will be different for the same transaction.

She sells 2 BTC in October 2026 for $90,000 USD. Her original US cost basis for those 2 BTC was $30,000 USD. US gain: $60,000, long-term (held over a year). Her Canadian ACB reset at departure to $80,000 CAD (the FMV of 2 BTC on departure date, converted at the exchange rate). The sale proceeds in CAD (at the October exchange rate) are $122,000 CAD. Canadian gain since departure: $42,000 CAD, with the 50% inclusion rate. The departure tax already captured the pre-departure gain on the Canadian side.

She owes US tax on the $60,000 long-term gain and claims a foreign tax credit for the Canadian tax on the $42,000 gain (to the extent it produces a credit under IRC 904(a)). The numbers do not match because the cost bases diverged at departure.

Illustrative numbers only, not a real client and not advice for your facts.

Practitioner note

The dual-currency cost basis is the bottleneck. Transaction-level reporting in both countries is a solved problem if you have clean records and software that tracks lots in both CAD and USD. The unsolvable version is a client who traded on five exchanges, moved mid-year, and has no records before the move. The departure tax requires a fair market value for every asset on the departure date, and without records, that valuation is a reconstruction project. For new clients who hold crypto and are planning a move, the best thing you can do is make them pull their full transaction history from every exchange before they leave. After the move, some exchanges restrict access for accounts at foreign addresses, and the data can become harder to get. The history export is the deliverable. Everything else follows from it.

What should I do next?

Pull your full transaction history from every exchange you use, in both countries. Make sure it includes dates, quantities, and fair market values in the exchange’s native currency. If you are planning a move, pull the history before you go. If you have already moved, pull it now before any exchange restricts your account. Then get the cost basis calculated in both currencies for every lot, including the departure date reset if applicable.

Form 8938 vs FBAR: do I file both?, the reporting threshold comparison for exchange accounts
T1135 for US accounts: late filing and VDP, the Canadian side of foreign property reporting
Form 1116: why isn’t my foreign tax credit dollar for dollar?, because the FTC limitation applies to crypto gains too
Leaving Canada permanently: a tax checklist, where departure tax on crypto is one item on the list

Moving across the border with crypto?

The Cross-Border Assessment is a fixed $249. You get a written, CPA-reviewed read on the reporting obligations, both sides, including the cost-basis reconciliation.

Book a free call →

Get the next cross-border guide by email

One or two plain-English guides a week on US-Canada tax. No spam, unsubscribe anytime.

Cite this page

Yarik Yarosh, CPA. "How Do I Report Cryptocurrency on Both Sides of the Border?." Blue Cloud CPA, August 21, 2026. https://bluecloudcpa.com/guides/cryptocurrency-tax-us-canada-cross-border

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.