Buy cryptocurrencies like Bitcoin (BTC), Dogecoin (DOGE) or Ether (ETH) in Canada is seeing an upsurge as crypto ownership increases. In addition, the Ontario Securities Commission, in its report, declared 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, read on and get familiar with the details.
Is it legal to buy cryptocurrency in Canada?
Cryptocurrency trading is legal in Canada even though it is not yet considered legal tender. Canada Revenue Agency (CRA) precise what virtual currencies are and provides information on any applicable taxes. One can choose to shop in cryptocurrency in Canada if retailers, cafes or e-commerce websites accept it.
The CRA treats cryptocurrency as a commodity that can result in capital gains or losses. Taxable transactions include sending, receiving, and exchanging cryptocurrencies. The Canadian 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 allow and recognize cryptocurrency trading subject to federal and state regulations. For example, Canadian banks have installed 2600+ 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 in the world in Bitcoin ATMs after the United States.
Some popular Canadian banks that support crypto trading in one way or another include National Bank of Canada, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank, ATB, and Coast Capital, among many more who are also joining as the popularity of crypto in Canada continues to rise.
Banks allow the purchase of crypto using a debit card, Interac e-Transfer, or wire transfer. Customers are required to link their bank accounts to a cryptocurrency exchange to purchase cryptocurrencies using Canadian dollars or other popular fiat currencies.
Credit cards can also be used to buy cryptos. However, this option can be expensive as banks may charge higher interest rates and additional fees. cash advance fee on crypto credit card purchases.
Ways to Buy Cryptocurrency in Canada
Two common ways to buy cryptocurrency in Canada are either through a broker or directly through an exchange. However, cryptocurrency exchanges giving the account holder more control over their crypto while brokers like Wealthsimple and Mogo may impose restrictions on holdings, withdrawals, transfers, and storage depending on their brokerage policy.
Crypto brokers in Canada are very much like a traditional financial trading platform. They aim to simplify the process and reduce the complexities through their platforms and 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 through a crypto broker
The steps below explain how to buy cryptocurrencies through brokers if one does not want to trade using a crypto exchange.
Step 1: Create an account on a crypto trading platform
Select a crypto trading platform of your choice, visit its website or download the app and sign up. Create an account with a valid email and phone number and fill in the personal information required to verify your account.
Step 2: Add funds to your account
Most crypto brokerage platforms offer plenty of payment method options to load trading funds with debit card, credit card, PayPal, wire transfer, or gift cards. Transfer fees can vary for each method and are generally higher for credit card payments as they are faster (5-10 minutes typically) and low for wire transfers which can take a few days to load the funds.
Step 3: Buy the cryptocurrency of your choice
Select the crypto you want to buy, 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 choose from and they do not trade all cryptocurrencies unlike crypto exchanges, which offer more choices. There are also restrictions on sell orders and volume, so it is recommended to check them before investing any funds.
Steps to buy cryptocurrency in Canada using a crypto exchange
The steps below will get the ropes for the crypto exchange, although each exchange may have slight variations.
Step 1: Choose 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 you to exchange the Canadian dollar for crypto or to exchange one type of crypto for another. 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, register 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 verify face matching against documents submitted to verify a person’s identity.
Step 3: Deposit money and buy cryptocurrency
Once the account is activated, link a bank account and deposit funds to this newly opened crypto account. With the funds ready, place an order to buy crypto and buy any cryptocurrency from those available on the exchange. Most people buy BTC in Canada, but the market is also flooded with altcoins like Binance Coin (BNB) or Solana (FLOOR).
Similarly, one can also sell crypto on these exchanges and convert to fiat and withdraw to the linked bank account. Bitcoin ATMs are another way to convert cryptocurrency to cash in Canada. However, not all ATMs have this feature 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 protected by any insurance protection like the Canada Deposit Insurance Corporation. theft, hacking, scams or cyberattacks are high and it is therefore important to secure secure storage for your crypto. Several ways to store crypto in Canada include:
At the exchange
Leave the crypto on the exchange and earn passive income through staking and agriculture. Staking helps earn crypto interest by locking cryptocurrency holdings on the exchange, while farming helps to earn more cryptocurrencies using existing crypto assets on the exchange.
Enable two-factor authentication, or 2FA, in the account login security settings to provide that extra layer of security. Risk can also be reduced by spreading crypto assets across multiple exchanges. Nevertheless, as centralized exchanges are known to change policies, rules or cease operations, storing across multiple exchanges can spread the risk of losing all assets in the event of a hacking, seizing or closing an exchange.
Crypto Wallets hold the “private keys” or a password to access cryptocurrency assets. So, crypto wallets don’t actually store your crypto, but they hold the keys that give 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 important because it helps recover private keys in case you forget them. Loss or forgetting of the seed phrase means permanent loss of 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 used are Ledger and Trezor. One can also strike a balance by storing in a combination of hot and cold wallets, as storing large amounts 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 cryptos in Canada at retailers that accept crypto payments directly or via debit or prepaid cards. A 2022 Capterra survey of 1,000 Canadian respondents revealed that 62% of participants are interested in getting paid in crypto within the next five years.
CoinGate accepts a wide range of cryptocurrencies where one can purchase 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 (furnishings).
Coincards is another online store to buy gift cards for many top brands including BestBuy, Amazon, Air Canada and more. They accept BTC and other cryptocurrencies and offer prepaid cards for making purchases on their website. The prepaid card is reloadable and can be topped up in crypto according to customer requirements.
Proactive provisions and clearly defined regulations set Canada apart and provide a benchmark for other countries to foster a crypto-friendly environment with the goal of proactively accelerating cryptocurrency adoption. However, investors should do their own thorough research and be familiar with the crypto landscape before committing funds.