The Canada Revenue Agency (CRA) has launched a significant tax investigation targeting users of Dapper Labs, the Vancouver-based company behind the Flow blockchain and popular NFT projects like NBA Top Shot and CryptoKitties. This marks only the second time a Canadian court has ordered such a disclosure from a crypto firm, following a similar 2020 order to exchange Coinsquare.
The CRA initially sought information on Dapper Labs' top 18,000 users but, following negotiations with the company's officials and lawyers, settled for a court order for data on 2,500 users. The agency is scrutinizing individuals who may have failed to report income or capital gains from their NFT transactions, treating cryptocurrencies and NFTs as commodities for tax purposes.
This crackdown is part of a broader enforcement effort where Canada has already recovered a staggering 100 million Canadian dollars (roughly $72 million USD) from crypto-related tax audits over the past three years. The CRA's 35-person crypto audit team has worked on over 230 files and estimates that 40% of taxpayers using crypto platforms have either failed to file taxes or are at high risk of non-compliance.
Despite the monetary success, enforcement faces structural challenges. In a sworn affidavit, the CRA's own top crypto auditor acknowledged the agency believes "there is no way to reliably identify taxpayers operating in the crypto space and assess compliance" with income tax obligations. While the CRA has initiated five criminal investigations with a "digital asset component" since 2020, four remain ongoing with no charges filed, attributed to case complexity, cross-border activity, and limited evidence.
The tax probe coincides with Canada advancing new stablecoin legislation and preparing to launch a dedicated financial crimes agency by spring 2026. Meanwhile, the country's anti-money laundering agency, FINTRAC, has been active, fining exchanges like Cryptomus a record C$176.96 million and KuCoin C$19.5 million for compliance failures in recent months.
