Is Bitcoin Legal in Canada? Here are the Facts

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Bitcoin is the most divisive asset in the financial world right now. One side believes it to be the instrument that fixes the global financial system, while others think it is a ponzi scheme.

Although it is a decentralized asset class, every country has had a different way of approaching cryptocurrencies and their adoption as an investment class. 

Buying and selling Bitcoin in Canada is legal. The Government of Canada has outlined on its official homepage that investing in digital currencies such as Bitcoin, is perfectly legal, and that capital gains will be taxed like any other investment asset. 

It’s a common belief now, among many investors, that even owning a little bit is a great way to diversify any investment portfolio. And in fact, that’s exactly why I buy Bitcoin as a Canadian, to diversify my investments.

Plus, if you live in Canada, there are no restrictions on trading Bitcoin aside from capital gains taxes.

If you’re new to the world of Crypto and wanted to get your feet wet, I’d recommend Wealthsimple Crypto. As a beginner, I started investing with Wealthsimple Crypto in 2021 and it’s been a great experience for me. It’s completely free to sign-up and you can do everything from you phone. (Plus you’ll get a $25 cash bonus when you sign-up here).

Is Bitcoin Legal in Canada?

Absolutely, Bitcoin is legal to buy, sell, trade, or hold, anywhere in Canada.

Unlike other countries where the governments have outlawed cryptocurrencies, the Canadian government has embraced it just like any another investing asset. Whether you buy it from a Canadian crypto exchange like Wealthsimple Crypto, or from a global crypto exchange like Binance, being a crypto trader in the Great White North is completely legal. 

Can You Get in Trouble for Buying Bitcoin?

You certainly can get in trouble for buying Bitcoin in some countries around the world, but not within the friendly borders of Canada.

In fact, the Canadian government outlines very clearly on its homepage that you can buy Bitcoin and even use it to pay for goods and services where accepted. Buying any asset in Canada is a non-issue in the eyes of the CRA or Canada Revenue Agency, it is when you sell the Bitcoin for profit that capital gains taxes come into play. 

It is easy to understand why some governments might be leery of some smaller coins but Bitcoin is a major asset class these days and is as stable as any cryptocurrency on the market. 

How Does Bitcoin Work in Canada?

Bitcoin works in the same way that you would assume any other investing class would in Canada. You can be a Bitcoin day trader or a long-term holder, but either way, any profit you make on the trade is subject to Canadian taxes.

The only other thing you need to worry about when investing in Bitcoin is that it can be a lot more volatile than other asset classes, but that is a given when it comes to cryptocurrencies.

If can’t handle volatility, don’t invest in crypto.

How else can you use Bitcoin in Canada? The Government of Canada is very clear that digital currencies like Bitcoin are not considered legal tender like it is in El Salvador. Bitcoin is its own asset class and since it is not issued by either the Bank of Canada or the Royal Canadian Mint, businesses do not have to accept it. 

Any other usage is accepted though including as a digital way to transfer funds, Bitcoin ATMs, and even sports betting. Most of the major crypto exchanges operate in Canada including Wealthsimple Crypto, Coinbase and Binance.

But in my opinion, as Bitcoin continues to receive mainstream acceptance in Canada, we can reasonably expect more businesses to begin to accept the flagship digital currency we call Bitcoin. 

What Other Cryptocurrency is Legal in Canada?

While Bitcoin is the largest cryptocurrency by market cap, there are literally thousands of other tokens you can invest in as a crypto trader. Luckily for Canadians, the government does not just accept Bitcoin as a digital currency, it accepts all of them!

You can trade any crypto including the major ones like Ethereum, Solana, or Polygon, and even smaller altcoins like Shiba Inu token, DogeCoin, and Floki Inu. 

When it comes to trading cryptocurrencies, Bitcoin and Ethereum rule the market. While you can certainly invest in the smaller coins, there is a very real chance that a lot of these tokens will go to zero. At this point in its history, it seems very unlikely that Bitcoin or Ethereum will ever head to zero as they are too far integrated into our financial system. 

But to be completely honest, who really knows. Only invest in crypto if you can accept that it may all go to zero (unlikely, but no one can predict the future for sure.)

Do I Have to Buy a Whole Bitcoin?

An excellent question that is asked by many investors who are looking to learn about cryptocurrencies. In Canada, most stock brokerages will require investors to buy whole shares and do not provide the opportunity to invest in fractional shares.

For cryptocurrencies though, it is a whole different story. 

The basis of crypto trading is to buy fractions of coins over time. Bitcoin investors are famous for the saying ‘stacking sats’ which is a reference to the individual units of each coin. They are called Satoshis in honor of the pseudonym of the creator of Bitcoin, Satoshi Nakamoto. There are 100 million satoshis in one Bitcoin. 

You can buy as many satoshis at a time as you wish when investing in Bitcoin. You can buy an entire Bitcoin if you have the cash lying around, or if you wish to just stack $100 worth of satoshis at a time, you can do that too. Cryptocurrencies are built upon fractional investing, and nobody expects you to buy one Bitcoin at a time. 

As you can see from the image below, I’m about to buy $100 worth of Bitcoin.

But of course I’m not going to buy one full Bitcoin ($47,610.15). Instead, Wealthsimple Crypto automatically calculates the amount of Bitcoin I’ll get with $100 (.0021 BTC) and then that’s how much will get added to my account when I complete the transaction.

Related Financial Geek Article: Is Wealthsimple Crypto Free (Quick Explanation)

Conclusion: Bitcoin is Legal in Canada

Canadian crypto traders rejoice! Bitcoin investing is very legal in Canada and there does not seem to be any sign that the government will be looking to ban it anytime soon.

Bitcoin offers Canadian investors a great way to diversify from just buying stocks and ETFs, and as the world financial system continues to be digitized, Bitcoin will likely play a larger part in our world moving forward (this is just my opinion!).

There are plenty of options for buying Bitcoin in Canada. As mentioned throughout this article, I’m a big fan of Wealthsimple Trade for beginners, but again – there are lots of good options out there. So find one that fits your needs and go with it.

Thanks for reading folks! I hope you learned a thing or two.

Geek, out.