Canada's Guide To Crypto Investment: Getting Started

Canada has embraced Bitcoin and other cryptocurrencies, and there are several ways to buy and sell them. You can use a cryptocurrency exchange, a crypto trading platform, a crypto broker, or a Bitcoin ATM.

A crypto exchange is a digital marketplace where buyers and sellers meet and trade cryptocurrencies. You can also use a crypto trading platform to buy and sell cryptocurrency easily and often cheaply. Crypto brokers are very similar to traditional trading platforms.

If you want to buy and sell smaller amounts of Bitcoin, you can use a Bitcoin ATM, but these typically charge very high fees and have less-than-ideal exchange rates.

Before investing in Bitcoin, it's important to understand the risks involved. Cryptocurrencies are highly volatile and are not backed by governments or central banks. There are also security risks, as hackers could potentially steal your Bitcoin. It's also important to consider the tax implications of buying and selling cryptocurrencies in Canada.

Choose a currency exchange

When choosing a currency exchange, there are several factors to consider. Firstly, security and compliance with Canadian laws are paramount. Look for exchanges that are registered with FINTRAC, the Canadian financial regulator, and ensure that they have a strong verification process in place. It is also important to choose an exchange that prioritises the safety of your assets by employing measures such as cold storage and two-factor authentication.

Another key consideration is the range of coins available on the exchange. While some exchanges offer a diverse selection of cryptocurrencies, others may only support a limited number of coins. If you are looking to trade a specific cryptocurrency, check that it is available on the exchange before signing up.

Fees and spreads are another important factor. Some exchanges charge higher fees for certain trades, while others have lower overall fees. Be sure to understand the fee structure of the exchange before committing to it.

Additionally, consider the deposit and withdrawal methods offered by the exchange. Look for exchanges that allow Canadian deposits with Interac e-Transfer and charge low or no fees for these transactions.

When choosing a currency exchange, it is also worth considering the user interface and whether it caters to your level of experience. If you are a beginner, look for an exchange with a straightforward and intuitive platform. On the other hand, more experienced traders may require advanced features such as charting tools and different order types.

Finally, customer support is an important factor to consider. Look for an exchange that offers prompt and responsive assistance through various channels such as email, live chat, and phone support.

Determine how to pay for your Bitcoin

There are endless currencies and payment methods you can use to buy Bitcoin. The most common payment methods include wire or bank transfer, other cryptocurrencies, and credit or debit cards.

If you are using a platform like Coinbase, you can add small to medium amounts of cash (CAD) to your cash balance, or add large amounts of cash to your cash balance. You can also use instant crypto purchases, and bank account verification. To link your bank account for Interac e-transfers, you'll need to make an initial deposit (add cash) to your Coinbase account. After your first successful deposit, you'll be able to use Interac e-transfers to withdraw (cash out) your CAD balance to your bank account as well.

Coinbase also allows you to make a purchase with a debit card if your card supports "3D Secure". You can also use a credit card, although some card issuers are blocking cryptocurrency purchases with existing credit cards.

If you are using a platform like Bitbuy, you can fund your account using Interac e-Transfer, Wire Transfer, Debit Card, Credit Card & Apple Pay, or Cryptocurrencies. Each method has its own fees and processing times. For example, the processing time of an eTransfer takes up to 30 minutes with a 0% deposit fee. The minimum deposit is $50, and the maximum is $10,000 per day.

It's important to note that credit card companies don't make it easy to buy Bitcoin, and they charge high transaction fees. A growing number of companies treat Bitcoin purchases as cash advances, meaning interest rates are higher, and they can charge higher transaction fees.

When deciding how to pay for your Bitcoin, it's crucial to consider the fees and processing times associated with each payment method and platform.

Decide where to buy Bitcoin

There are several options for buying Bitcoin in Canada. You can use a crypto exchange, a crypto broker, or a Bitcoin ATM. You can also invest in Bitcoin indirectly through a Bitcoin exchange-traded fund (ETF) or by investing in shares of companies that invest in Bitcoin, like PayPal and Square.

Crypto Exchanges

Crypto exchanges are digital marketplaces where buyers and sellers can meet and trade cryptocurrencies. Centralized exchanges (CEX) act as intermediaries, allowing users to store and trade crypto. Decentralized exchanges (DEX) don't have a middleman, allowing buyers and sellers to exchange crypto directly. Hybrid exchanges combine the speed and efficiency of CEX with the security and privacy of DEX. Examples of CEXs include Bitbuy and Coinbase, while Qurrex is a leading hybrid exchange.

Crypto Brokers

Crypto brokers are similar to traditional trading platforms. You load funds into your account and place an order for crypto, and the platform finds a seller or buyer to match your order. WealthSimple Crypto is the largest crypto broker in Canada.

Bitcoin ATMs

Bitcoin ATMs allow you to buy and sell Bitcoin with cash or a debit card. There are around 304 Bitcoin ATMs in Canada, with the largest concentrations in Calgary, Montreal, Toronto, and Vancouver.

Bitcoin ETFs

A Bitcoin ETF is a "basket" of securities that you can acquire in a single purchase, similar to a mutual fund. You can buy and sell Bitcoin ETFs through a traditional or online brokerage. Examples of Bitcoin ETFs in Canada include Purpose Bitcoin ETF (BTCC), Evolve's Bitcoin ETF (EBIT), and CI's Galaxy Bitcoin ETF (BTCX).

Shares of Companies that Invest in Bitcoin

You can indirectly invest in Bitcoin by purchasing shares of companies that invest in Bitcoin. Examples include PayPal and Square.

When deciding where to buy Bitcoin, it's important to consider factors such as security, fees, the range of cryptocurrencies offered, and customer service. It's also crucial to understand the risks involved in cryptocurrency investing, including high volatility, security risks, illiquidity, insolvency, and regulation.

Select a Bitcoin wallet

When investing in crypto, it is important to select a Bitcoin wallet that suits your needs. Here are some factors to consider when choosing a Bitcoin wallet in Canada:

• Type: Software wallets are typically free apps for mobile phones and desktop computers, suitable for beginners and smaller amounts of Bitcoin. Hardware wallets are more secure, better for larger amounts, and long-term savings but are less convenient for frequent transactions.
• Cost: While most software wallets are free, hardware wallets can cost upwards of $100 CAD.
• Operating System: Some wallets are mobile-only or desktop-only, while others support both.
• User Experience: Choose a wallet with an interface that matches your experience level and needs.
• Security: As the value of your Bitcoin holdings grows, consider more secure options like hardware wallets, passphrases, or multi-signature wallet setups.
• Payments: Transaction fees will increase as adoption rises, so consider wallets that support Layer 2 technologies like Lightning and Liquid for more affordable payments.
• Blockstream Jade: A lightweight, affordable, and open-source hardware wallet. It offers robust security features, a user-friendly interface, and supports various wallet types, including Bitcoin, Lightning, and multisignature.
• BlueWallet: A free, user-friendly, and open-source mobile wallet for iOS and Android. It supports basic functions like sending, receiving, and securing Bitcoin, as well as advanced options like multisignature and Lightning wallets.
• AQUA: A mobile wallet designed for efficient Bitcoin saving and spending. It divides holdings into a "savings account" and a "spending account," allowing users to save on Bitcoin network fees.
• Coldcard: A hardware wallet made in Canada, offering advanced security features, open-source code, and air-gapped transactions to keep private keys offline.
• Phoenix: A unique software wallet designed specifically for Bitcoin's Lightning network, enabling instant and cheap transactions. It is self-custodial, giving users full control over their assets.
• Zengo: A highly secure software wallet that eliminates the need for private keys. It offers a simple recovery process, in-wallet crypto purchases, and no transaction fees.
• Uphold: A platform that allows users to trade over 250 cryptocurrencies, traditional currencies, and precious metals. It provides a transparent balance sheet, ensuring fund safety, and offers a cashback debit card for rewarding transactions.
• Tangem Wallet: A hardware wallet consisting of physical cards with a secure element chip and an NFC antenna, along with a mobile app for iOS and Android. It adheres to the highest security standards and offers an open-source code.
• BitBuy: A secure and economical crypto exchange platform, offering advanced trading features, API automation, and support for popular cryptocurrencies like Bitcoin, Ethereum, and Solana.
• Coinbase Wallet: A user-friendly and non-custodial mobile wallet that integrates seamlessly with your Coinbase account. It offers cloud backups, biometric security, 2-factor authentication, and supports over 100 cryptocurrencies.
• Crypto.com: A wallet providing full control over private keys and digital assets, supporting multiple fiat currencies, and offering low fees for credit/debit card or bank transfers. It includes multiple security layers and mobile apps for iOS and Android.

Decide how to pay for Bitcoin

There are several ways to pay for Bitcoin in Canada. The first step is to sign up for a crypto exchange, such as LocalBitcoins.com, LocalCryptos.com, Paxful, Hodl Hodl, Bisq, Local.bitcoin.com, or LocalCoinSwap. These platforms allow you to buy Bitcoin directly from other users and support a wide range of payment methods, including cash, Interac e-Transfer, crypto/Bitcoin ATMs, cheques, PayPal, Western Union, and credit cards.

Another option is to use a local crypto or Bitcoin ATM. You can locate one near you via an online search, visit the ATM with cash in hand, and purchase Bitcoin after creating a Bitcoin wallet.

You can also use a local crypto exchange, such as Coinsmart, Coinberry, or Bitbuy, to create a free account, deposit Canadian dollars, and buy Bitcoin instantly. Global centralized crypto exchanges, like Binance and Coinbase, are also accessible in Canada and function similarly to local brokerage exchanges.

When deciding how to pay for Bitcoin, it is important to consider the associated fees and transaction costs. For example, using a credit card to purchase crypto on an exchange may incur higher fees compared to other payment methods. Interac e-Transfer is often the cheapest method for buying Bitcoin in Canada.

Additionally, some exchanges offer free cash deposits and withdrawals, while others charge spreads or trading fees. It is essential to review the fees and payment options supported by each exchange before making a decision.

Frequently asked questions