Bitcoin is legal in Canada, and so are all other cryptocurrencies. Anyone in the country can legally purchase, hold, and sell crypto, and it can be one way to diversify an investment portfolio. The catch is tax: you will need to pay taxes on any gains you make from buying and selling crypto, so it is wise to keep records of all your transactions from the start.
Is it legal to own cryptocurrency in Canada?
Yes. Cryptocurrencies are legal in Canada, but they are not considered legal tender. Government of Canada guidance on crypto assets notes that, unlike the Canadian dollar, crypto assets are not backed by a government or central bank. Instead, crypto is treated as a commodity subject to tax and securities laws.
In everyday terms, that means individual businesses can choose to accept cryptocurrency at their own risk, but the relatively more formal CRA will not accept it as a form of payment for your taxes. Buying, selling, and using crypto does not break any law.
Which crypto platforms are authorized in Canada?
Canadian securities regulators publish a national list of crypto platforms authorized to do business with Canadians. Entries on that list include Coinbase Canada Inc., a crypto asset trading platform, and APX Inc., a crypto-backed lending platform. In Ontario, the OSC lists crypto asset trading platforms that have received exemptive relief to offer crypto products to investors in the province.
So, is Coinbase legal in Canada? Yes. Coinbase is legal to use in Canada, and it is a legitimate cryptocurrency exchange as well. Canadians can sign up to buy, sell, and hold cryptocurrency through it.
Is there any Canadian cryptocurrency platform?
MyBTC is a Canadian bitcoin trading site. Although bitcoin remains the main crypto on the platform, MyBTC also lets you buy other cryptocurrencies such as Ripple and Litecoin. Among the payment methods the platform offers are Interac and bank transfers, credit and debit cards, and Flexepin vouchers.
How is crypto taxed in Canada?
Cryptocurrency is taxed like any other commodity in Canada. Digital currencies, including cryptocurrencies, are subject to taxation under ordinary income tax rules, and gains and losses from buying and selling cryptocurrencies must be reported as part of income when filing a tax return.
You only report gains or losses in the tax year that you dispose of your holdings — in other words, when you cash out or trade them. Simply buying and holding cryptocurrency is not a taxable event. When you do dispose of crypto at a profit, 50% of the gains are taxable and added to your income for that year.
There is no legal way to avoid paying taxes on cryptocurrency in Canada. All transactions above $10,000 must be reported to the CRA by the exchanges directly, and individuals are legally obligated to report gains on transactions below $10,000 in their annual tax filing.
Day traders should take particular note: the Canadian Revenue Agency classifies day trading as commercial income, so net profits from day trading cryptocurrencies minus net losses need to be reported on your income tax return.
Can you hold crypto in a TFSA or RRSP?
There is currently no way to hold actual bitcoin in a tax-advantaged account such as a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) — unless you use a bitcoin exchange-traded fund (ETF). If you buy cryptocurrencies directly, all the gains you make on them are subject to taxes. A Canadian stock that offers crypto exposure, on the other hand, is almost certainly eligible for your TFSA and could offer significant growth potential.
Which Canadian banks allow cryptocurrency purchases?
Several Canadian banks allow cryptocurrency purchases: Tangerine, a popular Canadian online bank established by Scotiabank; Toronto Dominion (TD); Royal Bank of Canada (RBC); Bank of Nova Scotia (Scotiabank); and Canadian Imperial Bank of Commerce (CIBC).
Which bitcoin wallet is best in Canada?
A hardware wallet is one of the safest crypto wallets for anyone who wants to hold bitcoin and other cryptocurrencies, because it is not attached to the internet most of the time. The Ledger Nano X is one of the best crypto wallets available due to the number of coins it supports and its high security.
How do you buy and cash out crypto in Canada?
Buying crypto in Canada is straightforward. On a platform such as CoinSmart, a digital wallet lets you purchase bitcoin using funds you have e-Transferred directly from your Canadian bank account. You can also fund purchases with a credit card, cryptocurrency you already own, or a bank draft.
Cashing out works in reverse: transfer your bitcoin from your wallet to a trading platform, log into your trading account, sell through the buy/sell option, then use the withdraw function to enter an amount in CAD and complete the withdrawal.
Whatever platform you choose, remember the tax rules above: selling crypto for Canadian dollars is a disposal, so keep records of every transaction so your annual tax filing is accurate.
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