Psiphon to relocate outside Canada over Bill C-22 surveillance concerns

Psiphon, a Toronto-based VPN provider known for helping users bypass state censorship, has announced plans to relocate outside Canada due to concerns over Bill C-22. The proposed law, which aims to expand law enforcement surveillance capabilities, has faced opposition from tech companies arguing it could force them to compromise user safety and transparency.

Psiphon plans relocation over Bill C-22 concerns

Psiphon, a Toronto-based VPN provider, has announced plans to relocate its operations outside Canada due to concerns over Bill C-22, a proposed law aimed at expanding law enforcement surveillance capabilities. According to TechRadar, the company argues that the bill would force it to compromise the safety of its users, particularly those in authoritarian countries like Iran, Russia, and China.

Bill C-22, introduced on March 12, 2026, would require telecoms, internet companies, and electronic service providers—including VPNs and messaging apps—to build surveillance capabilities for police and the Canadian Security Intelligence Service (CSIS). Psiphon claims this would undermine its open-source trust model, as the bill could mandate undisclosed changes to its systems to enable law enforcement access.

The company, which publishes all its code publicly, serves around 20 million monthly users who rely on it to bypass state censorship. Kenzie Elsworthy, Psiphon’s vice-president, stated that while the company does not want to leave Canada, it may be forced to if the law passes without further amendments.

Industry opposition and legislative progress

Bill C-22 has faced significant opposition from the tech industry. In June 2026, 23 companies, including Windscribe, Nord Security, and Kape Technologies, urged the Canadian government to amend the bill to protect privacy tools. The bill passed the House of Commons on June 18, 2026, and is now under Senate review.

The government has already amended the bill to include protections for end-to-end encryption and reduce metadata retention requirements to six months. However, critics argue these changes do not go far enough to address concerns about user privacy and the operational viability of open-source tools like Psiphon.

Psiphon’s origins trace back to 2006 as a project of Citizen Lab, a research group at the University of Toronto. This year, the company received approximately $600,000 in funding from Canada’s National Research Council, highlighting its ties to the country’s tech ecosystem.

Background: What is Bill C-22?

Bill C-22, introduced in March 2026, is a legislative proposal aimed at requiring electronic service providers—including VPNs, messaging apps, and internet companies—to build surveillance capabilities for law enforcement and national security agencies. The bill’s broad definition of "electronic service provider" has raised concerns among privacy-focused companies about compliance burdens and potential risks to user safety.

The bill has undergone some amendments, including protections for end-to-end encryption and a reduction in metadata retention periods. However, critics argue that these changes do not sufficiently address the concerns of companies operating in the privacy and censorship circumvention space.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

Psiphon’s potential exodus highlights a growing tension between national security legislation and the operational realities of privacy-focused tech companies. For founders in the cybersecurity and VPN space, this case underscores how regulatory risks can disrupt business models—especially for open-source tools reliant on user trust.

If Bill C-22 passes without further amendments, it could set a precedent that other governments might emulate, putting pressure on similar companies to reconsider their base of operations. For Canadian startups, this moment may also signal a need to anticipate regulatory shifts and proactively engage in policy discussions to avoid abrupt relocations or compliance challenges. The broader takeaway: regulatory uncertainty isn’t just a legal hurdle—it can reshape entire industries.

Key takeaways

• Psiphon is planning to leave Canada due to concerns over Bill C-22, which it argues would force it to compromise user safety.
• Bill C-22 aims to require electronic service providers, including VPNs and messaging apps, to build surveillance capabilities for law enforcement.
• The bill has faced significant opposition from tech companies, including 23 firms that urged the government to amend it.
• Psiphon, an open-source tool with 20 million monthly users, relies on transparency to protect users in censored regions like Iran, Russia, and China.
• If the bill passes unchanged, it could trigger an exodus of privacy-focused tech companies from Canada.

FAQ

What is Bill C-22?

Bill C-22 is a proposed Canadian law that would require electronic service providers, including VPNs, messaging apps, and internet companies, to build surveillance capabilities for law enforcement and national security agencies. The bill has passed the House of Commons and is under Senate review.

Why is Psiphon opposed to Bill C-22?

Psiphon argues that Bill C-22 would undermine its open-source trust model by forcing it to make undisclosed changes to its systems to enable law enforcement access. The company claims this would compromise the safety of its users, many of whom rely on it to circumvent censorship in authoritarian regimes.

What other companies have opposed Bill C-22?

23 companies, including Windscribe, Nord Security, Kape Technologies, Signal, and NordVPN, have urged the Canadian government to amend Bill C-22 to protect privacy tools and user safety.

What changes has the government made to Bill C-22?

The government amended the bill to add protections for end-to-end encryption and reduce metadata retention requirements to six months. However, critics say these changes do not address the broader concerns of privacy-focused companies.

How many users does Psiphon have?

Psiphon serves around 20 million monthly users, many of whom rely on it to bypass state censorship in countries like Iran, Russia, and China.

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