I Lost Money in Crypto and I'm Now in Debt — What Are My Options in Canada?

Last updated: August 2026.

Quick answer: Losing money in crypto does not cancel the debt used to buy it — a credit card, line of credit, or personal loan balance is owed in full regardless of what the crypto is worth now. Crypto losses are capital losses under CRA rules, so they can offset capital gains but not employment income. Any crypto you still hold must be disclosed to a Licensed Insolvency Trustee at current market value if you file a consumer proposal or bankruptcy — it has no special protection the way an RRSP does. The debt itself is resolved the same way as any other unsecured debt: a consolidation loan, a consumer proposal, or bankruptcy.

The Crypto Is Gone. The Debt Isn’t.

The single most common misunderstanding after a crypto loss is treating the loss itself as the problem. It usually isn’t — the problem is whatever was borrowed to fund the position. If you put $10,000 on a credit card to buy crypto and it’s now worth $2,000, you don’t owe $2,000. You owe the full $10,000 balance plus whatever interest has accrued since, typically 19.99%-24.99% on a standard Canadian credit card. The lender’s claim was created at the moment of purchase and has no connection to what happened to the asset afterward.

This applies the same way to a line of credit, a personal loan taken out and used to fund a trading account, or a cash advance. The debt is a fixed, enforceable obligation. The crypto was simply what the borrowed money was spent on — legally no different from spending it on anything else that lost value.

Crypto Losses and Canadian Taxes: What the CRA Actually Allows

Under Canadian tax rules, the Canada Revenue Agency generally treats cryptocurrency dispositions as either business income or capital gains/losses, depending on the nature and frequency of your activity. For most individual investors, crypto losses are capital losses. A capital loss can only be used to offset capital gains — in the same year, carried back up to 3 prior years, or carried forward indefinitely to future years with gains. It cannot reduce the tax owed on employment income, so a $15,000 crypto loss does not lower what you owe on your paycheque this year, even though it may feel like an obvious deduction.

This distinction matters when someone is deciding how to prioritize debt: the crypto loss itself typically will not generate a tax refund or immediate cash relief, while the debt used to fund the purchase continues to accrue interest on a fixed schedule regardless of tax treatment.

What Happens to Crypto You Still Hold If You File for Debt Relief

If some of the original position survived and you’re now considering a consumer proposal or bankruptcy for the resulting debt, any cryptocurrency you still hold is treated as an asset and must be disclosed to your Licensed Insolvency Trustee at its fair market value on the date of filing — the same treatment as cash, non-registered investments, or a vehicle with equity.

This is a meaningfully different rule than how RRSPs are treated in bankruptcy. RRSPs are protected from creditors under BIA s. 67(1)(b.3). Cryptocurrency has no equivalent statutory exemption. Depending on the value and your province’s exemption limits for other personal property, a trustee may need to account for crypto holdings differently than a protected retirement account — this is one of the specific questions worth raising in a free consultation before filing anything.

Resolving the Debt: Same Options as Any Unsecured Debt

Once the borrowed money is gone, the remaining task is resolving the debt itself — and a Licensed Insolvency Trustee or lender does not evaluate what the money was originally spent on. A credit card balance run up on crypto is treated identically to one run up on any other unsecured purchase.

The path that fits depends on the size of the balance relative to income, not on the fact that the debt originated from a crypto purchase. If the debt is still small enough that a consolidation loan meaningfully lowers the interest rate, that’s usually the fastest fix. If the balance is large relative to income, a consumer proposal addresses it directly while leaving retirement savings untouched.

What to Do Next

1. Separate the two problems. The crypto loss is a sunk cost. The debt is the active, ongoing problem — treat it as its own decision, not something tied to hoping the market recovers.
2. Don’t sell remaining crypto without a plan. If you’re close to considering a consumer proposal or bankruptcy, talk to a Licensed Insolvency Trustee before liquidating anything — asset transactions close to a filing date can be reviewed.
3. Get a free assessment of the actual debt. A consultation with a debt relief specialist or LIT costs nothing and looks at the balance on its own terms — size, rate, and income — the same way it would for any other unsecured debt.