Canada’s financial system is generally highly regarded, in part because of its strong regulatory controls. That regulation extends into some areas of crypto. The Canadian Securities Administrators (CSA) only authorizes a select number of crypto trading platforms. Even some relatively big crypto exchanges, like eToro, are not authorized to do business in Canada.
That said, there are still several regulated exchanges where Canadians can buy crypto, along with some other buying options that fall outside Canadian financial regulations — at least for now.
Before buying crypto in Canada, make sure you understand that crypto is not considered legal tender, so it doesn’t have the same protections or oversight as the Canadian dollar. Crypto is also taxed in Canada similarly to other investments. Selling for a gain can mean your profit falls under capital gains tax rules, or, if part of a business transaction, it could count as business income.
That being said, many Canadians are still interested in buying crypto. Maybe they want to take part in a speculative investment that can be high-risk/high-reward, or they believe in the utility of certain tokens.
Best Ways to Buy Crypto in Canada
Some of the best ways to buy crypto in Canada include going through the following avenues:
Centralized Crypto Exchanges (CEXs)
If you want to buy crypto in Canada from a regulated exchange, consider using a centralized crypto exchange (CEX). While some international exchanges, like Coinbase and Kraken, operate in Canada, there are also some exchanges founded in Canada. These include Bitbuy as well as money app Shakepay, which also operates as an exchange where you can buy Bitcoin and Ethereum.
CEXs, as regulated entities, have stringent verification requirements, such as following KYC (Know Your Customer) protocols when setting up an account. While that can mean limited privacy, CEXs tend to have good liquidity, are easy to use (including for beginners), and allow you to buy into crypto using fiat currency.
Decentralized Exchanges (DEXs)
If you want more privacy, rather than having to use your ID when creating an account on a CEX, you might instead use a decentralized exchange (DEX), such as Uniswap or PancakeSwap. These generally work by having you connect your crypto wallet to trade with others. However, because DEXs aren’t regulated like CEXs, they don’t necessarily have the same protections in place, and you’re more on your own in terms of the safety and security of your transactions.
You may have to do more homework to not only figure out how to use DEXs, but also to make sure that the transaction is legitimate. Consider platforms that use protections like escrow accounts to avoid scammers trying to get you to pay for tokens they don’t deliver. The lower liquidity on many DEXs also leads to a risk of slippage, where you end up paying more than expected for the asset.
Peer-to-Peer (P2P) Marketplaces
In some sense, DEXs can be considered P2P marketplaces. However, some platforms more directly connect buyers and sellers.
P2P marketplaces offer many of the same pros and cons as DEXs compared to CEXs, but one difference is that P2P marketplaces might allow for even more payment methods than DEXs. For example, you can potentially pay in gift cards on a P2P marketplace, or if the marketplace facilitates in-person trades, you might pay in cash. That can increase privacy but also add complexity and increase the risk of scams.
Crypto ATMs in Canada
Crypto ATMs let you buy crypto by depositing cash, or in some cases, connecting your crypto wallet. In Canada, a crypto ATM is generally supposed to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as a money service business, so you should search online to see if a particular ATM operator is registered before using it. One example of a registered operator is Bitcoin Depot.
You can search the operator’s website to find an ATM near you and see the process for using ATMs. Bitcoin Depot, for example, requires you to use a digital wallet such as Best Wallet, but you can set one up through its app if you don’t have one yet.
Depending on the required processes, some crypto ATMs provide greater simplicity and privacy than a purchase through a CEX, but fees and transparency might be more limited. Also, because of strong regulatory controls in Canada, crypto ATMs in the country generally don’t offer the same anonymity as they might in other parts of the world, although you still might be able to buy crypto without an extensive KYC check.
Canadian Finance Apps
You also might be able to buy crypto or crypto-related assets like bitcoin ETFs through finance/fintech apps, such as Wealthsimple. In many cases, the process for buying crypto resembles buying stocks through these apps, and the financial organization often provides resources such as handling custody of the crypto assets for you. The downside may be that you have less control and privacy compared to options like DEXs.
Best Payment Methods to Buy Crypto in Canada
The payment method you use to buy crypto depends on where you conduct the transaction, but some common options include:
- Interac e-Transfer: This Canadian payment system can be used to quickly transfer money from your bank into a crypto account, but it’s not very private.
- Bank wire transfers: Similar to Interac e-Transfer, bank wire transfers can be useful for buying crypto, especially for those looking to send higher amounts. However, wire transfers can incur additional fees.
- Credit/debit cards: Many crypto exchanges and other platforms let you use credit or debit cards to purchase crypto, but this convenience can come with higher fees and buying limits.
- Cash: If you’re trying to maximize privacy, buying crypto with cash could be the way to go. However, this often requires an in-person exchange, which can be riskier than a transaction through a regulated exchange. You also might be able to buy with cash using an ATM, but in Canada, this often requires connecting a wallet first, so it’s not necessarily as private as an in-person exchange.
- Crypto swaps: If you already own crypto, you can often swap one coin or token for another without having to switch back to fiat currency.
Tips for First-Time Canadian Crypto Buyers
Buying crypto can be complex and risky, especially if you’re a first-time buyer. Instead of rushing into what can be a volatile, highly speculative asset, consider the following tips:
- Start small: Don’t invest more than you’re willing to lose.
- Do your due diligence: Research coins and tokens before investing in them, along with the platforms you’re using to trade.
- Watch out for scams: Keep your guard up. Be mindful of potential phishing links and non-cybersecurity issues like rug pulls.
- Secure your accounts and wallets: For any crypto exchange account you create or crypto wallets you set up, keep security at the forefront. Use two-factor authentication (2FA) on exchange accounts.
- Know the tax implications first: Make sure you understand the tax implications of crypto investing before trading so you aren’t hit with a surprise bill.
FAQs
Can I buy bitcoin in Canada without ID?
You may be able to buy bitcoin in Canada without ID if you’re transacting through a decentralized exchange or a P2P marketplace. But if you’re buying through a regulated, centralized exchange, you generally need to provide your ID.
Is it legal to buy crypto in Canada?
Yes, it’s legal to buy crypto in Canada, though the legality of different transaction methods can vary. In general, the clearest legal way to buy crypto in Canada is through a regulated exchange or money service business. Other options may be more of a gray area.
Is crypto regulated by the Canadian government?
Yes, crypto is regulated by the Canadian government in several ways. The Canadian Securities Administrators (CSA) authorizes centralized crypto trading platforms and FINTRAC registers money service businesses. However, some aspects of crypto, like P2P marketplaces, fall outside direct regulation for now.
Created by the Commerce team at Business Insider with Best Wallet.
