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Bitcoin in Canada
Canada is generally considered to be a cryptocurrency-friendly country. According to a mid-2018 study by the Bank of Canada, around 85% of Canadians know what Bitcoin is.
However, keep in mind that BTC can only be purchased with a bank transfer in the country. As of April 2018, cryptocurrencies can not be purchased with credit and debit cards due to a blanket ban. Companies accepting virtual currency are expected to register with Fintrac.
Overall, for the everyday investor, buying Bitcoin won’t be an issue. However, keep in mind that it may take a few days for the payment to process due to a bank wire being required as per Canadian law.
Is Bitcoin Legal in Canada?
Bitcoin is completely legal in Canada. However, there is a currently a banking bank for those looking to purchase cryptocurrencies with a debit or credit card. However, investors are free to hold and trade Bitcoin or any other cryptocurrency as they wish without any issues.
However, it should be noted that Bitcoin is not considered legal tender in Canada. Legal tender in Canada can only be banknotes issued by the Bank of Canada and any coins minted under the Royal Canadian Mint Act. However, this is just a technicality and has no bearing on the everyday investor in Bitcoin.
How to Buy and Sell Bitcoin in Canada
Most of the exchanges which currently offer their services in the United States also do so in Canada. So, Canadians will not have a hard time buying and selling Bitcoin. The industry is well-regulated and there are no real legal ‘grey areas’ for investors.
Top Bitcoin exchanges in Canada
There are a few cryptocurrency exchanges that are based in Canada and have been operating in the country for a long time. However, international exchanges like Coinbase also allow Canadians to buy BTC just as easy as Americans.
Based in Toronto, Coinsquare is the leading cryptocurrency exchange in Canada and often boasts some of the highest Bitcoin trading volume in the country. It also offers other cryptocurrencies like Ethereum, XRP, and Litecoin. Cryptocurrencies can be purchased with Canadian Dollars (CAD) and fees are competitive at 0.2%. Bank deposits and withdrawals and deposits are fully supported.
A relative newcomer onto the scene, Einstein formed in 2017. It offers CAD deposits via bank transfer or Interac e-Transfer for free. Trading fees are generally 0.25% or below for trades of under $5,000 in volume. The exchange is well known for its around-the-clock support services.
Coinbase is the leading global cryptocurrency exchange for fiat-to-cryptocurrency trading and is also available in Canada. With high liquidity, traders can head on over to Coinbase Pro to conduct crypto-to-crypto trades. If you’re a beginner, you can simply just purchase some BTC instantly through Coinbase’s own custodial service.
The exchange is currently expanding its offered cryptocurrencies to include other altcoins like Ripple (XRP), Chainlink (LINK), and more.
Kraken offers services in the United States, EU, Japan, and also Canada. Although the order books for its CAD-based trading pairs is rather thin, it does offer more altcoins than its competitors like Coinbase. Fees are relatively low and it remains a popular destination for traders around the world.
Of course, you can always head on over to LocalBitcoins to purchase or sell Bitcoin over-the-counter. This can be done through bank transfer or even an in-person trade. Just be careful to make sure the individual you are trading with has a longstanding reputation.
Most of the major cities in Canada accept Bitcoin. There are currently some 700 Bitcoin ATMs in the country, many of which also offer other cryptocurrencies like Ethereum and Litecoin. Most of them are located in Toronto, Montreal, and Vancouver.
Canada’s Tax Rules on Bitcoin Profits
Canada’s Revenue Agency has not issued any specific instructions on how to best deal with taxes on cryptocurrency-related profits, mining, and transactions other than its Income Tax Rulings and Technical Interpretation document.
These current guidelines are as follows. Essentially, if you use Bitcoin or other digital currencies to purchase goods, the seller must include it on their income tax. GST/HST also applies to the ‘fair market value’ for any good purchased with cryptocurrencies. If you are an investor, on the other hand, then you should treat digital currency as a commodity. This means any gains or losses must be reported. Commodities are subject to the rules of the Income Tax Act.
All Bitcoin held must be reported as ‘property’ as a commodity to the tax office. An annual T1135 filing is required to report these holdings.
In all, the taxation situation in Canada is still unclear but it would be best to speak to a tax specialist on how to best assess capital gains tax on your cryptocurrency-related profits. Also keep in mind that no cryptocurrency-related assets are insured under the law and there are far fewer protections for crypto-holders than those who hold Candian dollars, of course.
Where to Spend Bitcoin in Canada
Currently, there are many stores in Canada which accept Bitcoin and other cryptocurrencies. For example, KFC’s Canadian branch currently accepts BTC payments. Simon Fraser University’s bookstore, for one, accepts Bitcoin as well. Yet, you will have a difficult time finding too many stores accepting BItcoin nonetheless. However, using Canadian-based Coincards, individuals can use BTC to purchase gift cards for most major department stores in the country. This way, you can spend your BTC virtually anywhere.
Of course, you can always use BTC to purchase goods online. Many vendors, like NewEgg, allow for cryptocurrency payments for goods that can be shipped to Canada. You may have to pay extra shipping if the vender is international, however.
History of Bitcoin in Canada
Canada is moving towards a cashless society following the trails of leading economies like Sweden, Denmark and Norway.
Even though the usage of cash in Canada is starting to decline, it is not going at a fast pace. There are still many retailers where consumers are used to paying with cash, rather than cards or mobile payments.
This digitization of payments and increasing interest of people towards electronic payment systems has opened opportunities for Bitcoin, which enables anyone to transact or settle payments, with much lower fees.