Buying cryptocurrencies such as Bitcoin (BTC), Dogecoin (DOGE), or Ether (ETH) in Canada is on the rise as cryptocurrency ownership grows. Moreover, the Ontario Securities Commission stated in its report that more than 30% of Canadians plan to buy crypto assets in 2023.
So, if you are wondering how to buy bitcoin or cryptocurrency in Canada, read on and check out the details.
Is it legal to buy cryptocurrency in Canada?
Cryptocurrency trading is legal in Canada, although it is not yet considered legal tender. The Canadian Revenue Agency (CRA) defines what virtual currencies are and provides information on all applicable taxes. In Canada, it is possible to make purchases in cryptocurrency if it is accepted by retailers, cafes or e-commerce sites.
CRA treats cryptocurrencies as a commodity that can lead to capital gains or losses. Taxable transactions include sending, receiving and trading cryptocurrencies. The Securities Administrators of Canada website details how your crypto assets are regulated in Canada.
Do Canadian banks allow cryptocurrency?
With the growing popularity of cryptocurrencies, Canadian banks are allowing and recognizing the trading of cryptocurrencies in accordance with federal and state regulations. For example, Canadian banks have installed over 2,600 Bitcoin ATMs, with the highest number in Toronto at 897 ATMs. These ATMs allow people to convert their physical money into digital currency, as well as buy and sell cryptocurrencies in exchange for cash. Canada ranks second in the world for Bitcoin ATMs after the US.
Some of the popular Canadian banks that support cryptocurrency trading in one way or another include the National Bank of Canada, the Canadian Imperial Commercial Bank, the Royal Bank of Canada, Scotiabank, ATB and Coast Capital, among many others also joining the growing popularity of cryptocurrencies in Canada.
Banks allow you to buy cryptocurrencies with a debit card, Interac wire transfer, or bank transfer. Customers must link their bank accounts to a cryptocurrency exchange in order to purchase cryptocurrencies using the Canadian dollar or other popular fiat currencies.
Credit cards can also be used to buy cryptocurrencies. However, this option can be expensive as banks may charge higher interest rates and additional cash advance fees for credit card purchases in cryptocurrencies.
Ways to buy cryptocurrency in Canada
Two common ways to buy cryptocurrencies in Canada include either through a broker or directly through an exchange. However, cryptocurrency exchanges give the account holder more control over their cryptocurrency, while brokers like Wealthsimple and Mogo can set limits on holding, withdrawals, transfers, and holding depending on their brokerage policy.
Cryptocurrency brokers in Canada are very similar to a traditional financial trading platform. They aim to simplify the process and reduce complexity through their platforms and their expertise in the field of cryptocurrencies. However, this convenience comes at a cost as they charge higher fees for their services compared to crypto exchanges.
Steps to Buy Cryptocurrency in Canada with a Crypto Broker
The following steps explain how to buy cryptocurrencies through brokers if you don’t want to trade with a crypto exchange.
Step 1. Create an account on a cryptocurrency trading platform.
Select the cryptocurrency trading platform of your choice, go to its website or download the app and register. Create an account with a valid email address and phone number and fill in the required personal details to verify your account.
Step 2: Add funds to your account
Most crypto brokerage platforms have a variety of payment methods for loading trading funds with a debit card, credit card, PayPal, bank transfer, or gift cards. Transfer fees can vary for each method and are generally higher for credit card payments as they are faster (typically 5-10 minutes) and lower for bank transfers which can take several days to be credited.
Step 3: Buy the cryptocurrency of your choice
Select the cryptocurrency you want to buy, place an order, and the trading platform will match your purchase order. However, crypto brokers have a limited basket of currencies to choose from, and they do not trade every cryptocurrency, unlike crypto exchanges, which offer a wider selection. There are also limits on sell orders and volume, so it’s a good idea to check them out before investing any funds.
Steps to Buy Cryptocurrency in Canada with a Crypto Exchange
The steps below will help you set up a crypto exchange, although each exchange may have slight differences.
Step 1. Choose an exchange
A crypto exchange is a digital marketplace where buyers and sellers can meet and trade different types of cryptocurrencies. Many exchanges allow you to exchange Canadian dollars for cryptocurrencies or exchange one cryptocurrency 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 choosing an exchange, sign up with a valid email address and phone number to open an account. Supporting documents must be uploaded, including driver’s license and passport. Most exchanges will ask for a selfie to verify that the face matches the documents submitted to verify the person’s identity.
Step 3: Deposit cash and buy cryptocurrency
After activating your account, link a bank account and deposit funds to this newly opened crypto account. When the funds are ready, place an order to buy cryptocurrency and buy any cryptocurrency 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, you can sell crypto on these exchanges, convert it to fiat, and withdraw it to a linked bank account. Bitcoin ATMs are another way to convert cryptocurrencies into cash in Canada. However, not all ATMs have this capability and many charge high service fees.
How to store cryptocurrency in Canada?
It is important to store and protect crypto assets because, unlike fiat, they are not protected by any kind of insurance protection, such as the Canadian Deposit Insurance Corporation. The risks of theft, hacking, fraud or cyberattacks are high and therefore it is important to provide secure storage for your cryptos. Several ways to store cryptocurrencies in Canada include:
On the exchange
Leave your cryptocurrency on the exchange and earn passive income from staking and farming. Staking helps earn interest from cryptocurrencies by locking up cryptocurrencies on the exchange, while farming helps you earn more cryptocurrencies using existing cryptocurrencies on the exchange.
Turn on two-factor authentication or 2FA in your account login security settings for an extra layer of security. The risk can also be reduced by distributing crypto assets across multiple exchanges. However, since centralized exchanges are known to change policies, rules, or go out of business, holding on multiple exchanges can increase the risk of losing all assets in the event of an exchange being hacked, seized, or shut down.
Cryptocurrency wallets contain “private keys” or a password to access crypto assets. Thus, crypto wallets do not actually store your cryptocurrency, but contain keys that provide access to your digital money living on the blockchain. One wallet can hold multiple coins such as BTC, ETH, DOGE or any other altcoins supported by this wallet.
However, protecting the seed or recovery phrase is essential as it helps recover private keys in case someone might forget. The loss or forgetting of a seed phrase means the irretrievable loss of stored crypto assets.
The two types of cryptocurrency wallets in Canada or any other country are hot wallets and cold wallets.
MetaMask, Binance Trust Wallet, Coinbase Wallet, and CoinSmart are examples of hot cryptocurrency wallets in Canada, while cold wallets are used by Ledger and Trezor. You can also find balance by storing in a combination of hot and cold wallets, since storing a lot of coins in one wallet can be quite risky.
How and where to spend cryptocurrency in Canada?
Purchases can be made with BTC and other cryptocurrencies in Canada at retail stores that accept crypto payments directly, or with debit or prepaid cards. A 2022 Capterra survey of 1,000 Canadian respondents found that 62% of participants are interested in being paid in crypto over the next five years.
CoinGate accepts a wide range of cryptocurrencies where you 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 booking) and Overstock (furniture).
Coincards is another online store where you can purchase gift cards from many leading brands, including BestBuy, Amazon, Air Canada, and more. They accept BTC and other cryptocurrencies and offer prepaid cards for purchases on their website. The prepaid card is rechargeable and can be topped up with cryptocurrencies according to the client’s requirements.
Proactive provisions and well-defined rules set Canada apart and serve as a benchmark for other countries in creating a cryptocurrency-friendly environment to proactively accelerate cryptocurrency adoption. However, investors should do their own extensive research and have a good understanding of the crypto landscape before investing any funds.