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How to buy cryptocurrency in Canada?

by SuperiorInvest

Buying cryptocurrencies such as Bitcoin (BTC), dogecoin (DOGE) or ether (ETH) in Canada is on the rise as cryptocurrency ownership grows. Additionally, the Ontario Securities Commission in its report, established that more than 30% of Canadians plan to buy cryptoassets in 2023.

So, if you are wondering how to buy bitcoins or crypto in Canada, then read on for the details.

Is it legal to buy cryptocurrency in Canada?

Cryptocurrency trading is legal in Canada, although it is not yet considered legal tender. Canada Revenue Agency (CRA) clarifies what virtual currencies are and provides information on all applicable taxes. In Canada, you can choose to shop in cryptocurrency if retailers, coffee shops 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 trading cryptocurrencies. The Canada Securities Administrators website details how your crypto assets are regulated in Canada.

Do Canadian banks allow cryptocurrencies?

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 being the highest with 897 ATMs. These ATMs allow people to convert their physical money into digital currency and buy and sell cryptocurrencies in exchange for cash. Canada is ranked second in the world at Bitcoin ATMs across 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, also joining as cryptocurrency popularity in Canada still rising.

Banks allow the purchase of cryptocurrencies using a debit card, Interac electronic transfer or bank transfer. Customers are required to link their bank accounts with 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 more cash advance fees for 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 cryptocurrency, while brokers like Wealthsimple and Mogo can limit holdings, withdrawals, transfers and deposits depending on their brokerage policies.

Crypto 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 cryptocurrency expertise. 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 you don’t want to trade using a crypto exchange.

Step 1: Create an account on a cryptocurrency trading platform

Choose the crypto trading platform of your choice, go to its website or download the app and register. Create an account with a valid email and phone number and fill in the required personal information 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 using debit card, credit card, PayPal, bank transfer or gift cards. Transfer fees can vary between methods and are usually higher for credit card payments as they are faster (usually 5-10 minutes) and low for bank transfers which can load funds in a few days.

Step 3: Buy the cryptocurrency of your choice

Select the cryptocurrency 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 do not trade every cryptocurrency unlike crypto exchanges that offer more options. There are also limits on sell orders and volume, so it’s a good idea to check them before investing any funds.

Steps to buy cryptocurrency in Canada using a crypto exchange

The steps below will get you the ropes for a crypto exchange, although each exchange may show slight variations.

Step 1: Choose an exchange

A crypto exchange is a digital marketplace where buyers and sellers can meet trade different types of cryptocurrencies. Many exchanges will allow you to trade the Canadian dollar for crypto or 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, log in with a valid email and phone number to open an account. You will need to upload verification documents including your driver’s license and passport. Most exchanges will ask for a selfie to check a facial match with the documents submitted to verify a person’s identity.

Step 3: Deposit cash and buy cryptocurrency

Once the account is activated, link the bank account and deposit funds into this newly opened crypto account. With the means ready, place an order to buy cryptocurrencies and buy any cryptocurrency from those available on the exchange. Most people buy BTC in Canada, but the market is also flooded altcoins like Binance Coin (BNB) or Solana (SALT).

Similarly, cryptocurrencies can be sold on these exchanges and converted to fiat and withdrawn to a linked bank account. Bitcoin ATMs are another way to convert cryptocurrency to cash in Canada. However, not all ATMs have this option and many charge high service fees.

How to store cryptocurrency in Canada?

It is important to keep and secure crypto-assets because, unlike fiat, they are not protected by any insurance protection such as the Canada Deposit Insurance Corp. theft, hacking, fraud or cyber attacks are high and therefore important safe secure storage for your cryptocurrencies. A few ways to store cryptocurrency in Canada include:

On the switchboard

Leave crypto on the exchange and get passive income from betting and farming. Staking helps earn interest on cryptocurrencies by locking held cryptocurrencies to an exchange farming helps to earn more cryptocurrencies 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 crypto assets across multiple exchanges. However, as centralized exchanges have been known to change policies, rules or cease operations, listing on multiple exchanges may spread the risk of losing all assets in the event hacking, confiscation or closing of the exchange.

Crypto wallets

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

However, hedging seed or recovery phrase is important because it helps recover private keys in case you forget them. Losing or forgetting the seed phrase means permanent loss of stored cryptographic assets.

The two types of cryptocurrency wallets in Canada or any country are hot wallets and cold wallets.

Hot wallets vs.  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. Balance can also be achieved by storing in a combination of hot and cold wallets, as storing a large number of coins in one wallet can be quite risky.

How and where to spend cryptocurrency in Canada?

Purchases can be made using BTC and other cryptocurrencies in Canada at retailers that directly accept crypto payments or via debit or prepaid cards. 2022 Capterra survey of 1,000 Canadian respondents exposed that 62% of participants are interested in being paid in cryptocurrencies in 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 accepting crypto 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 to shop on their website. The prepaid card is rechargeable and can be topped up with cryptocurrencies according to the customer’s requirements.

Proactive provisions and clearly defined regulations set Canada apart and provide a benchmark for other nations to promote a crypto-friendly environment to proactively accelerate crypto adoption. However, investors should do their own extensive research and become well-versed in the crypto environment before committing any funds.

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