In light of Canadian regulatory requirements, Kraken must implement net purchase limits for some Canadian clients over a rolling 12-month period for certain crypto assets.
What are net purchase limits?
Clients living in all Canadian provinces and territories, with the exception of British Columbia, Manitoba and Quebec, will have the following net purchase limits applied to purchases of certain crypto assets:
- Permitted Clients and Accredited Investors will have no net purchase limits.
- Eligible Investorswill be limited to a net purchase amount of $100,000 CAD in a rolling 12-month period.
- All other clients will be limited to a net purchase amount of $30,000 CAD in a rolling 12-month period.
No limits apply to the purchase of Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH) and Litecoin (LTC).
Examples
In order to understand some examples, we first need to define the concept of the Remaining Asset Limit (RAL). RAL = The remaining Canadian Dollar value of crypto assets that a client is allowed to purchase in the remaining 12-month period. The below examples apply to a client who is not a Permitted Client, Accredited Investor or Eligible Investor, and who does not reside in British Columbia, Manitoba or Quebec. Example 1: $30,000 CAD Purchase
- A client purchases $30,000 CAD of Chainlink (LINK), therefore, the Remaining Acquisition Limit (RAL) is $0. The client cannot make any additional purchases for 12 months (rolling).
Example 2: Partial Sale
- A client purchases $30,000 CAD of LINK and so the RAL is $0. The client sells $20,000 CAD of LINK. The RAL then becomes $20,000 CAD.
Example 3: Crypto Deposit and Withdrawals
- A client purchases $30,000 CAD of Solana (SOL), therefore, the RAL is $0. The client withdraws their SOL balance off the platform and so RAL is $0.
Note: Withdrawals do not affect the RAL. Only purchases and sales on Kraken’s platform have an effect on the RAL.
- A client deposits $40,000 CAD of Aave (AAVE), therefore, RAL is $0.
Note: Deposits do not affect the RAL. Only purchases and sales on Kraken’s platform have an effect on the RAL.
- A client sells $40,000 CAD of AAVE. RAL becomes $30,000 CAD.
Note: For clients who are not Permitted Clients, Accredited Investors or Eligible Investors, RAL can never go above $30,000 CAD.
Example 4: 12-month Rolling Period Illustration
4a) Purchasing $30,000 CAD at once:
- Client purchases $30,000 CAD of SOL on Jan. 1, 2023 | RAL = $0.
- Client does not sell any crypto during the rest of 2023, their RAL remains $0.
- On Jan. 1, 2024, client’s RAL resets to $30,000 CAD.
- Client purchases $30,000 CAD of SOL on Jan. 2, 2024 | RAL = $0.
4b) Purchasing less than $30,000 CAD over the year:
- Client purchases $15,000 CAD of SOL on Jan. 1, 2023 | RAL = $15,000 CAD.
- Client purchases $15,000 CAD of SOL on June 1, 2023 | RAL = $0.
- On Jan. 1, 2024, client’s RAL is $15,000 CAD since it has been one year since the client’s original purchase.
- Client purchases $15,000 CAD of SOL on Jan. 1, 2024 | RAL = $0.
- On June 1, 2024, client’s RAL is $15,000 CAD since it has been one year since the client’s second purchase.
- Client can purchase an additional $15,000 CAD of SOL on Jule 1, 2024.