Canada Crypto Exchange Bankruptcy Losses 2026 – CRA Tax Guide

Thousands of Canadians lost funds in FTX, Celsius, and Voyager. Here is how the CRA treats these losses and when you can actually claim them.

CRA Position on Exchange Bankruptcy Losses

The CRA has not issued specific guidance on exchange bankruptcies. Based on general principles, losses depend on whether:

• The crypto is treated as a capital loss (if held as investment)
• The crypto is treated as a business loss (if held as trading inventory)
• A bad debt situation applies (if the exchange owes you a debt)

Timing: When Can You Claim the Loss?

This is the critical question. You generally cannot claim a loss until it is "realized" – meaning the loss is certain and quantifiable. Options:

• When bankruptcy declared: Claim the loss if you are certain of recovery amount
• When final distribution known: Claim the difference between your investment and recovery
• When you sell your creditor claim: Secondary markets exist for bankruptcy claims

Most Canadian tax advisors recommend waiting for the final recovery amount to be established before claiming the full loss.

Partial Recovery

If you receive partial recovery (e.g., 30 cents on the dollar from FTX):

• Your loss = amount invested − amount recovered
• If you receive tokens (not cash), value them at FMV on date received
• The recovered amount becomes your new cost basis

Capital Loss Carryback/Carryforward

Capital losses in Canada can be:

• Carried back 3 years to offset prior capital gains (file T1A)
• Carried forward indefinitely to offset future capital gains
• Capital losses can only offset capital gains – not business income or employment income

Practical Steps for Affected Canadians

1. Register as a creditor in the bankruptcy proceedings
2. Document your original investment amounts and dates
3. Track all recovery distributions received
4. Consult a Canadian tax professional for the optimal loss-claiming year
5. File T1A if you want to carry losses back to prior years

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.