Digital Asset Warrants: New Enforcement Powers, Open Questions

Since September 2023, the Criminal Code has included a provision that allows for the seizure, management, and disposition of "digital assets" (including "digital currency") that are proceeds of crime (the "Digital Assets Warrant").¹ The Digital Assets Warrant was added as part of Canada's effort to strengthen its ability to detect and prosecute financial crimes.² The tool aims to address a perceived gap in the ability of law enforcement to deal with digital assets.³

The RCMP recently used the power to carry out "the largest cryptocurrency seizure in Canadian history", seizing more than CAD $56 million in digital assets from an offshore exchange. The RCMP was able to seize the assets because the servers and infrastructure that ran the exchange were physically located in Canada, giving Canadian courts jurisdiction to issue warrants and police the ability to take control of wallets and keys stored abroad. Operating over the internet, the exchange had users and funds from around the world.⁴

The Criminal Code requires that the Digital Assets Warrants "be executed in Canada"; however, law enforcement may search for digital assets using a "computer program" and seize them, including by taking control of the right to those assets. The reference to a computer program (a defined term under s. 342.1(2) of the Criminal Code⁵) suggests that, while the warrant must be executed in Canada, law enforcement may do so by deploying any applicable software from within Canada to locate and take control of digital assets that may be situated outside the country.

The Digital Assets Warrant

The introduction of the Digital Assets Warrant was a direct response to the Cullen Commission report, which identified the need for Canadian law enforcement to "follow the money and uncover evidence of criminal activity."⁶ It empowers law enforcement to more track and seize digital assets linked to financial crimes and reflects an effort to modernize enforcement in the face of evolving technology.

If there are "reasonable grounds to believe" that "any digital assets, including virtual currency" may be proceeds of crime, the provision allows law enforcement to obtain a Digital Assets Warrant under s. 462.321(1) of the Criminal Code to:

• search for the digital assets by using a "computer program";
• seize — including by taking control of the right to access — the digital assets, as well as any other digital assets found during that search that the person or peace officer believes, on reasonable grounds, may be the subject of such an order of forfeiture.

The warrant "may be executed at any place in Canada."⁷

Extraterritorial Reach

The Digital Assets Warrant provision has not received judicial interpretation in Canada yet, and it remains to be seen how the courts will interpret the power's extraterritorial reach. In particular, it remains unclear whether courts will view the use of a computer program deployed from within Canada to assert control over digital assets located abroad as consistent with the statutory requirement that the warrant be "executed in Canada", or instead as an impermissible exercise of power. However, existing jurisprudence on other Criminal Code investigative and preservation powers offers insight into how courts may approach the reach of Digital Asset Warrants:

• In a 2008 decision, eBay Canada Ltd. v. Minister of National Revenue,⁸ which concerned a production order issued under the Income Tax Act, the Federal Court of Appeal concluded that information stored outside Canada on servers in California was not "foreign-based information" since employees of a Canadian eBay affiliate were able to access the information from Canada. The Court focused on practical accessibility rather than formal legal authority over the data.
• The now-leading authority on the extraterritorial reach of Criminal Code production orders is British Columbia (Attorney General) v. Brecknell,⁹ which followed the eBay approach. The British Columbia Court of Appeal held that a Canadian court may compel a foreign entity to produce records stored outside Canada if the entity has a sufficient "virtual presence" in the jurisdiction.¹⁰ The Court rejected a strictly territorial approach tied to the physical location of data and emphasized the need for effective law enforcement tools in an increasingly digital and borderless environment.
• Brecknell was applied to establish jurisdiction outside of the production order context in R. v. Binance Holdings Limited.¹¹ In that case, the Ontario Superior Court granted criminal restraint and management orders over cryptocurrency traced to Binance accounts. The Court concluded that it had jurisdiction under the Criminal Code because relevant Binance entities had constructive possession of the assets and were present in Canada, including by "virtual presence" through significant operational indicators in Canada. In doing so, the Court expressly rejected the application of the more restrictive Unifund¹² standard, which had required a stronger territorial nexus, holding that it was not the governing framework for modern digital assets and internet‑based custodians. Additionally, the Court in Binance held that it had a basis to pierce the corporate veil of an entity which had no virtual presence in Canada to give effect to the criminal legislation.

Existing case law suggests that Canadian courts are prepared to assert jurisdiction over digital intermediaries with a real and substantial Canadian virtual connection. At the same time, the Digital Assets Warrant raises distinct interpretive issues, including the requirement that it be "executed in Canada." It is still unclear how courts will interpret and apply this provision alongside case law that acknowledges the borderless character of digital assets. Each case must be determined on its own facts and in light of evolving case law.

Takeaways

• Businesses should expect increased criminal enforcement processes that seek information about, or control over, digital assets outside of Canada's borders.
• Courts have shown a willingness to look beyond where data is physically located and focus instead on whether a foreign entity does business in Canada, which includes factors such as whether:
  • services are provided to Canadians, even if just virtually;
  • revenue is generated from Canadian operations;
  • there is targeted advertising in Canada;
  • the entity gathers information and data in Canada;
  • the entity has a license or registration to undertake business in Canada;
  • the entity has Canadian employees; and
  • executives and key decision makers reside or work in Canada.
• Courts have also shown a willingness to enforce criminal jurisdiction against entities with no virtual presence in Canada through other legal mechanisms, including piercing the corporate veil, to give effect to law enforcement processes that will affect Canadians.

Footnotes

1. Criminal Code, R.S.C., 1985, c. C-46, s. 462.321.

2. Senate, Standing Committee on Legal and Constitutional Affairs, Evidence, 44th Parl., 1st Sess., No. 37 (6 March 2024), online: https://sencanada.ca/en/Content/Sen/Committee/441/LCJC/56237-E.

3. Senate, Standing Committee on Legal and Constitutional Affairs, Evidence, 44th Parl., 1st Sess., No. 37 (6 March 2024), online: https://sencanada.ca/en/Content/Sen/Committee/441/LCJC/56237-E.

4. The RCMP had previously used the same power in July 2025 to seize 460,000 USD Tether ("USDT", valued at approximately CAD $640,000) linked to an investment fraud targeting an Ontario resident. Tether International voluntarily cooperated by freezing or assisting with access to the digital currency, and the RCMP recovered the assets even though the fraud may have had international aspects.

5. Criminal Code, s. 342.1(2), which defines "computer program" as "computer data representing instructions or statements that, when executed in a computer system, causes the computer system to perform a function".

6. Commission of Inquiry into Money Laundering in British Columbia, Final Report (June 2022), at p. 1551.

7. Criminal Code, s. 462.321(3.1).

8. eBay Canada Ltd. v. Minister of National Revenue, 2008 FCA 348.

9. British Columbia (Attorney General) v. Brecknell, 2018 BCCA 5.

10. British Columbia (Attorney General) v. Brecknell, 2018 BCCA 5, at para. 40. See also R. v. Love, 2022 ABCA 269.

11. R. v. Binance Holdings Limited, 2025 ONSC 7113.

12. Unifund Assurance Co. v. Insurance Corp. of British Columbia, 2003 SCC 40. See also R. v. Binance Holdings Limited, 2025 ONSC 7113, at para. 19: "In Unifund, the Supreme Court of Canada developed a test to determine whether provincial legislation could apply to an out-of-province defendant. The test operates to limit impermissible extraterritorial application of provincial law by 'reading down' general language so as not to contravene the presumption against extraterritoriality."

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