How to Invest in Cryptocurrency in Canada

The Canadian cryptocurrency market is very interesting and somewhat controversial. The world's first publicly accessible Bitcoin ATM started working in Vancouver in 2013. The second one was later installed in Toronto in early 2014. Apart from Bitcoin ATMs, the country has categorized cryptocurrencies as commodities, so it is legal to buy and use them as a digital currency. This designation is important because it implies that while you can use cryptocurrencies like Bitcoin to purchase goods and services online or in certain stores, they are not legal tender like the Canadian dollar.

Cryptocurrencies have become increasingly adopted around the world. Individuals, institutions and even states are interested in it. Do you want to know how to buy and sell cryptocurrencies in Quebec and in other provinces of Canada? Which cryptocurrencies to buy in 2023? The best sites to buy cryptocurrency this year? Here is the information you should know before you start trading cryptocurrencies.

How to Buy Cryptocurrencies in Canada? 

To buy cryptocurrencies like Bitcoin, it is best to use an exchange platform. These are digital marketplaces that allow you to trade, buy, and sell cryptocurrency. There are many reputable Canadian Bitcoin exchanges. The choice is vast, so it's best to learn about the deposit and withdrawal processes, fees and transaction speeds of each of the platforms to determine which one is best for you.   

To buy cryptocurrencies in Canada, you can use different trading platforms. You have the choice between centralized platforms, and decentralized exchanges (DEx). Unlike centralized platforms, DEx allows you to buy and sell cryptocurrencies by connecting you with other users.

What Cryptocurrencies to Buy in 2023?

The best cryptocurrency for you – like an investment project – depends on your profile, investment capacity and medium/long term goals. It is true that the first purchase of cryptocurrency can be daunting, especially if you are not yet familiar with the technical jargon. To help you get off on the right foot, we suggest you follow these tips:

Tip #1: Do your research. Take the time to educate yourself, not just about cryptocurrencies, but about retail investing in general. Understanding how the markets move and learning how to manage your emotions during sharp rises and falls will pay off when it comes to implementing a buying strategy.

Tip #2: Also take the time to educate yourself on how blockchains work. Indeed, the value of a cryptocurrency depends in part on the size and stability of the blockchain responsible for issuing currencies. Understanding blockchain technology will therefore help you decide if your project is likely to succeed.

Tip #3: Clearly define your investment goals. Do you trade cryptocurrencies to generate short-term profits? Or do you intend to keep them for a longer period? Understanding this will help you define your risk tolerance and invest in the best cryptocurrencies.

Tip #4: Choose a reputable exchange. If you're new to buying cryptocurrencies, you'll want to make sure you're buying and selling through a safe and secure exchange.

Tip #5: Start slow. Some cryptocurrency exchanges allow you to trade on margin. While leveraged trades can amplify your good decisions, they can also result in significant debt if your chosen coins lose value.

Tip #6: Only invest what you can afford to lose. As interest in cryptocurrencies grows, it can be tempting to jump in and take risks.

Is It Easy to Buy Cryptocurrencies in Canada?

It is relatively simple to buy crypto currencies in Canada. The first step is to choose a hardware or software wallet. The second step is to choose an exchange on which to buy the virtual currency. The third step, which can be tedious, is to have your identity verified through what is known as the Know Your Customer (KYC) process. To do this, you must submit your full name, date of birth and home address to the exchange. Some platforms verify your identity by requesting a copy of your passport or government-issued ID. 

Can you Buy Cryptocurrencies via a Canadian Credit Card?

Most Canadian credit card companies have blocked the purchase of cryptocurrencies, with the exception of KOHO . As its slogan suggests, KOHO promotes a new era of banking. Its Visa debit card is one of the only credit cards that allows Canadians to buy cryptocurrencies on a number of exchanges. In addition to your credit card, you can use Interac transfers, wire transfers, bank transfers or direct purchase by debit to buy cryptocurrencies.

Is Bitcoin Legal in Canada? What About Other Cryptocurrencies?

It is legal to buy cryptocurrencies in Canada. The Canadian government has categorized cryptocurrencies as commodities, which means that although you can buy, trade, mine or interact with cryptocurrencies, they cannot be considered registered investments and transactions they fall under the category of barter transactions. It's best to think of cryptocurrencies like gold or silver, or like your parents' record collection that's worth millions but won't part with.

Can you Buy Cryptocurrencies Directly through Your Bank Account?

There is no way to buy cryptocurrencies on an exchange directly with your bank account, either with a debit card or a credit card. Currently, all known bank accounts limit the purchase of Bitcoin or any other cryptocurrency.

However, the easiest way to circumvent this restriction is to transfer from your account to the platform of your choice, then convert your Canadian dollars into Bitcoins or any other cryptocurrency.

What Are the Most Famous Cryptocurrency Exchanges in Canada?

There are many exchanges based in Canada, two of the most famous/popular of which are Bitbuy and Coinberry. The most infamous Canadian cryptocurrency exchange is Quadriga. One of the biggest cryptocurrency-related news stories of 2019 was the mysterious death of Quadriga's CEO, and the subsequent discovery that most of the platform's wallets were in fact empty, leading many to wonder if Quadriga was a scam, and if its CEO was really dead.

The Best Bitcoin Wallets for Canadians

There are many excellent hardware and software cryptocurrency wallet options in Canada. These wallets aren't tangible like the leather foldable object or money clip in which you store your IDs, various payment methods, and credit cards. 

Hardware Wallets for Canadians

The hardware wallet is one of the best ways to store your cryptocurrencies. It's offline, which means it's inaccessible to hackers, and you can be sure of having exclusive access to your funds. The following wallets are best in class:

  • Ledger Nano X; 
  • Ledger Nano S;
  • Trezor One;
  • Trezor Model T;
  • KeepKey.

Software Wallets for Canadians

Software wallets are another great way to store your funds because you have sole custody and your crypto assets are accessible on your desktop or mobile device.

The following software wallets are among the easiest to use, thanks to their simple user interface:

  • Exodus Wallet;
  • JAXX Liberty;
  • Atomic Wallet;
  • Mycelia;
  • Guarda Wallet.

Taxation of Cryptocurrencies in Canada

Canada allows the use of cryptocurrencies, but does not consider them a means of payment. The Canadian Revenue Agency defines cryptocurrency as a commodity. The use of cryptocurrencies to pay for goods or services is considered as a barter transaction. Cryptocurrency transactions are otherwise subject to Canadian tax laws and regulations, including the Income Tax Act.

Any income from cryptocurrency transactions is treated as a business income tax or capital gains tax by the tax agency. Only 50% of capital gains are taxed. The final tax rate is determined by total income and province. Each province in Canada has different income tax rates.

For operations with cryptocurrency, you need to register on the crypto exchange at the Center for Analysis of Financial Transactions and Reports (FINTRAC). Registration requires mandatory user verification. Mining for commercial purposes is also subject to income tax.

Crypto Canada – FAQ

Are there provinces where cryptocurrencies are not available?

No, cryptocurrencies are available in all provinces. This is because they are considered federally legal goods. While securities such as cryptocurrencies are regulated at the provincial level, cryptocurrency regulations have been harmonized across provinces.

What is the cheapest way to buy Bitcoins in Canada?

The cheapest way to buy Bitcoins in Canada is through an online exchange. The choice of the cheapest platform will depend on its fees, whether deposit, withdrawal or exchange fees. Your preferred sourcing method is a determining factor in deciding which platform is right for you. It's also worth noting that you don't have to use a Canadian (i.e. based in Canada) platform, as platforms such as Gemini and Coinbase accept Canadian customers and have lower fees than certain Canadian platforms.

Can I sell my Bitcoins in Canada?

You can sell your Bitcoins (or any other cryptocurrency) in Canada through an exchange. Simply deposit your Bitcoins (if stored in your wallet and not already on the exchange) to the exchange. Once they're on the platform, you can sell them at market value, and once they're sold, you can withdraw the funds to the bank account you've linked to the platform. Remember that you will be taxed on the gains made by selling cryptocurrency in Canada.

Are there Bitcoin ATMs in Canada?

Yes. In fact, the world's first Bitcoin ATM appeared in Vancouver, and Canada is the country with the most Bitcoin ATMs per capita. Bitcoin ATMs are the most anonymous way to buy bitcoin, but using them often involves much higher fees (6-8% above market) than online exchanges. They are therefore not considered the most cost-effective method.

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