How to buy cryptocurrency in Canada?

Buying cryptocurrencies such as Bitcoin (BTC), Dogecoin (DOGE) or Ether (ETH) in Canada is on the rise as ownership of cryptocurrencies increases. Furthermore, the Ontario Securities Commission, in its report, said that more than 30% of Canadians plan to buy cryptocurrencies in 2023.

So, if you are wondering how to buy Bitcoin or cryptocurrencies in Canada, read on and familiarize yourself with the details.

Is it legal to buy cryptocurrencies in Canada?

Cryptocurrency trading is legal in Canada although it is not yet considered legal tender. Canada Revenue Agency (CRA) specifies what virtual currencies are and provides information on all applicable taxes. One can choose to buy cryptocurrency in Canada if retailers, coffee shops or e-commerce sites accept it.

The CRA treats cryptocurrency as a commodity that can lead to capital gains or losses. Taxable transactions include the sending, receiving and trading of cryptocurrencies. The 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 allow and recognize cryptocurrency trading subject to federal and state regulations. For example, Canadian banks have installed over 2600 Bitcoin ATMs, with Toronto at the most with 897 ATMs. These ATMs allow people to convert their physical cash into digital currency and buy and sell cryptocurrency for cash. Canada ranks second globally in Bitcoin ATMs after the United States.

Some popular Canadian banks that support cryptocurrency 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 others who also join as Cryptopopularity in Canada continues to grow.

Banks allow the purchase of cryptocurrencies using a debit card, Interac electronic transfer or wire transfer. Customers are required to link their bank accounts with a cryptocurrency exchange to purchase cryptocurrencies using the Canadian dollar or other popular fiat currencies.

Credit cards can also be used to purchase cryptocurrencies. However, this option can be expensive as banks can 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 through a broker or directly through an exchange. However, cryptocurrency exchanges give the account holder more control over their cryptocurrency while brokerages like Wealthsimple and Mogo can impose restrictions on holdings, withdrawals, transfers and storage depending on their brokerage policy.

Cryptocurrency brokers in Canada are very similar to a traditional financial trading platform. They aim to streamline the process and reduce the complexities through their platforms and cryptocurrency expertise. However, this convenience comes at a cost, as they charge higher fees for their services than cryptocurrency exchanges.

Steps to buy cryptocurrency in Canada through a cryptocurrency broker

The steps below explain how to buy cryptocurrencies through brokers if you don’t want to trade using a cryptocurrency exchange.

Step 1: Create an account on a cryptocurrency trading platform

Select a cryptocurrency trading platform of your choice, go to its website or download the application and register. Create an account with a valid email address and phone number and enter the required personal details to verify your account.

Step 2: Add funds to your account

Most cryptocurrency brokerage platforms have many payment method options for loading trading funds by debit card, credit card, PayPal, wire transfer, or gift cards. Transfer fees may vary by method and are usually higher for credit card payments as they are faster (usually 5-10 minutes) and low for bank transfers which can take a few days to load. funds.

Step 3: Purchase the cryptocurrency of your choice

Select the cryptocurrency you wish to purchase, 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 all cryptocurrencies unlike cryptocurrency exchanges, which offer more choices. There are also restrictions on sell orders and volume, so it’s a good idea to check these before investing funds.

Steps to buy cryptocurrency in Canada using a cryptocurrency exchange

The steps below will provide the foundation for trading cryptocurrencies, although each exchange may show slight variations.

Step 1: Choose your exchange

A cryptocurrency exchange is a digital marketplace where buyers and sellers can meet and trade different types of cryptocurrencies. Many exchanges will allow the Canadian dollar to be exchanged for cryptocurrencies or to exchange one type of cryptocurrency 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 a trade, register with a valid email address and phone number to open an account. Verification documents including driver’s license and passport will need to be uploaded. Most exchanges will require a selfie to match the face with the documents sent to verify a person’s identity.

Step 3: Deposit money and buy cryptocurrency

Once your account is activated, connect a bank account and deposit funds into this newly opened crypto account. With funds ready, place a cryptocurrency buy order 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 (SOL).

Similarly, one can also sell cryptocurrencies on these exchanges and convert them into fiat and withdraw them to the linked bank account. Bitcoin ATMs are another way to convert cryptocurrency into cash in Canada. However, not all ATMs have this feature, and many charge a high service fee.

How to store cryptocurrency in Canada?

It is important to store and protect cryptographic assets because, unlike fiat, they are not protected by any insurance protection such as Canada Deposit Insurance Corp. The risks of theft, hacking, scams or cyber-attacks are high and therefore it is important to secure storage safe for your crypto. Different ways to store cryptocurrencies in Canada include:

On the exchange

Leave the cryptocurrency on the exchange and earn passive income from staking and farming. Staking helps earn crypto interest by locking up cryptocurrency holdings on the exchange, while farming helps earn more cryptocurrencies by using existing crypto assets on the exchange.

Turn on two-factor authentication, or 2FA, in your account login security settings to provide an extra layer of security. Risk can also be reduced by spreading your crypto assets across multiple exchanges. However, since centralized exchanges have been known to change policies, rules, or cease operations, filing across multiple exchanges can spread the risk of losing all assets in the event of an exchange being hacked, seizure, or closure.

Crypto wallets

Crypto wallets contain the “private keys” or a password for accessing cryptocurrency assets. So, crypto wallets don’t actually store your cryptocurrency, they hold the keys that provide access to your digital money that lives on the blockchain. It is possible to hold multiple coins in one wallet such as BTC, ETH, DOGE or any other altcoin, as supported by that wallet.

However, protecting your recovery seed or phrase is important because it helps you recover your private keys in case you forget them. Losing or forgetting 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.

Hot wallets versus cold wallets

MetaMask, Binance Trust Wallet, Coinbase Wallet and CoinSmart are examples of crypto hot wallets in Canada, while the cold wallets in use are Ledger and Trezor. A balance can also be found 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 cryptocurrencies in Canada?

Purchases can be made with BTC and other cryptocurrencies in Canada at retailers that accept payment directly in cryptocurrencies or by debit or prepaid cards. A 2022 Capterra survey of 1,000 Canadian respondents revealed that 62% of respondents are interested in being paid in cryptocurrencies over the next five years.

CoinGate accepts a range of cryptocurrencies where you can purchase gift cards for eBay, Amazon, PlayStation, BestBuy, Airbnb and more. Other retailers accepting cryptocurrency payments in Canada include Newegg (gaming products), Travala (travel bookings), and Overstock (home 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 shopping on their website. The prepaid card is reloadable and can be topped up with cryptocurrencies as per the customer’s requirement.

Proactive provisions and clearly defined regulations distinguish Canada and provide a point of reference for other nations to promote a crypto environment with the aim of accelerating the proactive adoption of cryptocurrency. However, investors should do their own thorough research and be well versed in the cryptocurrency landscape before committing funds.