Purchasing cryptocurrencies like Bitcoin (BTC), Dogecoin (DOGE) or Ether (ETH) in Canada is on an upsurge as crypto ownership rises. Moreover, the Ontario Securities Commission, in their report, stated that more than 30% of Canadians plan to buy crypto assets in 2023.
So, if you are wondering how to buy Bitcoin or crypto in Canada, then read on and familiarize yourself with the details.
Is it legal to buy cryptocurrency in Canada?
Cryptocurrency trading is legal in Canada even though it is not yet considered a legal tender. Canada Revenue Agency (CRA) specifies what virtual currencies are and provides information on all applicable taxes. One can choose to shop in cryptocurrency in Canada if retailers, coffee shops or e-commerce websites accept it.
The CRA treats cryptocurrency like a commodity that can result in capital gains or losses. Taxable transactions include sending, receiving and trading cryptocurrencies. Canada Securities Administrators’ website details how your crypto assets are regulated in Canada.
Do Canadian banks allow cryptocurrency?
With the growing popularity of cryptocurrencies, Canadian banks do allow and recognize cryptocurrency trading subject to federal and state regulations. For instance, Canadian banks have installed 2,600+ Bitcoin ATMs, with Toronto at the highest with 897 ATMs. These ATMs allow people to convert their physical money into digital currency and buy and sell cryptocurrency in exchange for cash. Canada ranks second worldwide in Bitcoin ATMs after the United States.
Some popular Canadian banks which support crypto trade in one way or the other include the National Bank of Canada, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank, ATB and Coast Capital, among many others also joining in as the crypto popularity in Canada continues to rise.
Banks allow purchasing crypto using a debit card, Interac e-transfer or bank wire transfer. Customers are required to link their bank accounts with a cryptocurrency exchange for buying cryptocurrencies using the Canadian dollar or other popular fiat currencies.
Credit cards can also be used to purchase crypto. However, this option can be expensive since banks may charge higher interest rates and additional cash advance fees on crypto credit card purchases.
Ways to buy cryptocurrency in Canada
Two common ways to buy cryptocurrency in Canada include either through a broker or directly through an exchange. However, cryptocurrency exchanges give the account holder more control over their crypto while brokers like Wealthsimple and Mogo may put restrictions on holdings, withdrawals, transfers and storage depending on their brokerage policy.
Crypto brokers in Canada are very similar to a traditional finance trading platform. They aim to simplify the process and reduce complexities through their platforms and expertise in the cryptocurrency field. However, this convenience comes at a cost, as they charge higher fees for their services in comparison to the crypto exchanges.
Steps to buy cryptocurrency in Canada through a crypto broker
The below steps explain how to buy cryptocurrencies via brokers if one doesn’t want to trade using a crypto exchange.
Step 1: Set up an account on a crypto trading platform
Select a crypto trading platform of your choice, go to its website or download the application and sign up. Create an account with a valid email and phone number and fill in the requisite personal information details to verify your account.
Step 2: Add funds to your account
Most crypto broker platforms have many options for payment methods to load trading funds with a debit card, credit card, PayPal, wire transfer or gift cards. Transfer fees can vary for each method and are usually higher for credit card payments as they are faster (5-10 minutes usually) and low for wire transfers which can take a few days to load funds.
Step 3: Buy cryptocurrency of your choice
Select the crypto you want to purchase, place an order and the trading platform will find a match for your buy order. However, crypto brokers have a limited basket of currencies to select from and they do not trade in every cryptocurrency unlike crypto exchanges, which offer more choices. There are also restrictions on selling orders and volume, so it is a good practice to check these before investing any funds.
Steps to buy cryptocurrency in Canada using a crypto exchange
The steps below will get the ropes for crypto exchange though each exchange may show slight variations.
Step 1: Pick your exchange
A crypto exchange is a digital marketplace where buyers and sellers can meet and trade different types of cryptocurrencies. Many exchanges will allow trading the Canadian dollar for crypto or exchanging one type of crypto for another. The exchanges that support cryptocurrency trading in Canada are Coinbase, Binance, Crypto.com, Kraken, KuKoin, Bitbuy and Coinberry.
Step 2: Create an account
After selecting an exchange, sign up with a valid email and phone number to open an account. Verification documents including driver’s license and passport will need to be uploaded. Most exchanges will ask for a selfie to check for a face match with the documents submitted for verifying a person’s identity.
Step 3: Deposit cash and buy cryptocurrency
Once the account is activated, link a bank account and deposit funds into this newly opened crypto account. With the funds ready, place a crypto buy order and purchase any cryptocurrency from the ones available on the exchange. Most people buy BTC in Canada but the market is also flooded with altcoins like Binance Coin (BNB) or Solana (SOL).
Similarly, one may also sell crypto on these exchanges and convert to fiat and withdraw in the linked bank account. Bitcoin ATMs are another way to convert cryptocurrency to cash in Canada. However, not all ATMs have this facility and many charge high service fees.
How to store cryptocurrency in Canada?
It is important to store and secure crypto assets because unlike fiat, they are not guarded by any insurance protections like the Canada Deposit Insurance Corp. Risks of thefts, hacking, scams or cyberattacks are high and hence it is important to secure safe storage for your crypto. Several ways to store crypto in Canada include:
On the exchange
Leave the crypto on the exchange and earn passive income from staking and farming. Staking helps earn crypto interest by locking the cryptocurrency holdings on the exchange, while farming helps to earn more cryptocurrencies using existing crypto assets on the exchange.
Turn on the two-factor authentication, or 2FA, in the security settings of the account login to provide that extra layer of security. Risk can also be reduced by spreading the crypto assets across multiple exchanges. Nonetheless, as centralized exchanges have been known to change policies, rules or cease operations, storing on multiple exchanges may spread the risk of losing all assets in the event of a hack, seizure or closure of an exchange.
Crypto wallets hold the ‘private keys,’ or a password for access to the cryptocurrency assets. So, crypto wallets do not actually store your crypto, but they hold the keys that provide access to your digital money living on the blockchain. It is possible to hold multiple coins in one wallet like BTC, ETH, DOGE or any other altcoins, as supported by that wallet.
However, securing the seed or recovery phrase is significant because it helps to recover private keys in the event one may forget. Losing or forgetting the seed phrase means permanent loss of the stored crypto assets.
Two types of cryptocurrency wallets in Canada or any country are hot and cold wallets.
MetaMask, Binance Trust Wallet, Coinbase Wallet and CoinSmart are examples of crypto hot wallets in Canada, while cold wallets in use are Ledger and Trezor. One can also strike a balance by storing in a combination of hot and cold wallets as storing large quantities of coins in a single wallet can be quite risky.
How and where to spend cryptocurrency in Canada?
Purchases can be made with BTC and other crypto in Canada at retailers who directly accept crypto payments or through debit or prepaid cards. A 2022 Capterra survey of 1,000 Canadian respondents revealed that 62% of the participants are interested in being paid in crypto in the next five years.
CoinGate accepts a wide range of cryptocurrencies where one can buy gift cards for eBay, Amazon, PlayStation, BestBuy, Airbnb and more. Other retailers that accept crypto payments in Canada include Newegg (gaming products), Travala (travel bookings) and Overstock (home furnishings).
Coincards is another webshop to purchase gift cards for many top brands including BestBuy, Amazon, Air Canada and more. They accept BTC and other cryptocurrencies and offer prepaid cards for shopping on their website. The prepaid card is reloadable and can be topped up with crypto as per customer requirement.
Proactive provisions and clearly defined regulations set Canada apart and provide a benchmark for other nations to foster a crypto-friendly environment with the aim of accelerating cryptocurrency adoption proactively. However, investors should do their own extensive research and be well-versed with the crypto landscape before committing any funds.