How to Buy Crypto in Canada 101: Steps, Exchanges and Legislation

Understanding how to navigate crypto transactions safely is paramount to all investors. 

First, let’s look at a simplified view of the steps to buy crypto in Canada, and then we’ll delve into each more deeply.

Buying Crypto in Canada: Simplified Overview 

Crypto data platform Coinmarketcap lists over 9,000 cryptocurrencies . So how do you choose one and, once you’ve decided, where can you buy them? Let’s deal with each question in turn:

• Choose your crypto
• Choose your exchange or platform
• Register and fund your account
• Make your purchase

How to Buy Bitcoin in Canada

To buy Bitcoin in Canada, choose and create an account on a crypto exchange and use your fiat currency to purchase Bitcoin. Ensure the exchange is reputable and offers secure transactions.

How to Buy Altcoins in Canada

T​​o acquire altcoins in Canada, first, choose a crypto exchange that lists a wide range of altcoins. Then, you can use fiat currency or trade some of your Bitcoin If you already have some) to buy the altcoins you’re interested in.

Choosing Which Crypto to Buy

There is an ever-increasing number of cryptocurrencies, most of which are meme coins with no real-world value or use case. 

Note: None of what I discuss here should be taken as financial advice; it’s just a place to start your research.

My first piece of advice is DYOR (Do Your Own Research) into any potential investment. It is true regardless of what you invest in: crypto, stocks, bonds, commodities…anything.

An excellent place to start when researching crypto investments is coinmarketcap.com ; it is the go-to platform for all crypto data. While crypto investing is still considered very high-risk, there are less risky options. 

Source: Coinmarketcap

Market Cap

Market cap refers to the current price of an asset multiplied by the circulating supply of coins (or shares of a company in traditional stocks). 

Market cap is used to understand the relative size of one asset against another. 

Assets with a higher market cap are more stable than those with a lower value. Well-established crypto assets like Bitcoin and Ethereum have the largest market cap (short for market capitalization). 

Crypto Use Case

Another area to look at is the use case. If a crypto asset is used for a specific reason and has some intrinsic value, it could be considered a more sensible investment. 

Bitcoin is increasingly being used as a store of value (much like gold has been for generations). 

Ethereum, Cardano, Solana, etc., are Layer 1 blockchains; in simple terms, they are the foundations upon which other blockchains build applications.

If you want to learn more about investing in crypto, there are many online courses that you can take. 

Choosing a Crypto Exchange

After researching and deciding which crypto assets you want to invest in, it’s time to choose where to buy them.

Centralized Exchanges

• Highly regulated
• Require “Know Your Customer” verification
• Huge range of crypto assets
• The number of features can be overwhelming
• Custodial

Centralized exchanges (CEXs) act as intermediaries between buyers and sellers; they have an extensive range of tradable crypto assets. 

CEXs are highly regulated and require users to perform “Know You Customer” (KYC) registration by providing personal details and identification. 

Although they may initially seem daunting to novices due to their complexity, CEXs often come equipped with very good educational resources. 

Notably, CEXs are custodial, meaning they retain control over users’ funds. Despite this, for added security, many individuals opt to transfer their assets to non-custodial wallets post-purchase. 

Nevertheless, CEXs attract users to keep their assets on the platform by offering appealing earning opportunities.

Bitbuy, Coinbase, and Wealthsimple are popular centralized exchanges available in Canada.

Centralized Finance (CeFi) Platforms

• Highly regulated
• Require “Know Your Customer” verification
• Smaller range of crypto assets
• Easy to use
• Custodial

Like centralized exchanges, CeFi platforms are highly regulated and require users to verify KYC. However, their user interface is much simpler than CEXs, meaning new users find it much easier. 

They often look and feel like your regular banking app.

CeFi apps usually have a much smaller range of crypto, but users can trust any assets they do offer will have been vetted thoroughly. Many also offer financial products designed to earn you interest on your assets. 

CeFi platforms are also custodial.

Swissborg and Crypto.com are popular CeFi platforms available in Canada

Decentralized Exchanges (DEXs)

• Provide person-to-person (P2P) trading
• No middleman; they run on Smart Contracts
• No KYC verification required
• Non Custodial
• Require a deeper understanding of how crypto works

Unlike centralized exchanges and CeFi apps, decentralized exchanges (DEXs) don’t stand between buyers and sellers. DEXs work directly on decentralized networks like Ethereum, Solana, and Cardano, allowing people to trade directly with each other.

They require no KYC verification and are non-custodial; users always control their assets as they will be held in their crypto wallet. 

While many view DEXs as a safer alternative to CEXs (in terms of hacks and data breaches), they require a more in-depth understanding of how crypto works. For this reason, DEXs may not be suitable for new crypto investors because of the knowledge needed to invest and trade safely.

UniSwap (Ethereum), Orca (Solana), and Minswap (Cardano) are the top DEXs on each blockchain. (According to DeFi data platform DeFiLlama ).

• Bitcoin ATMs
• Only found in bigger cities
• Simple to use
• Require prior understanding of crypto transactions
• Users must have a crypto wallet already.

A more novel way of buying crypto (and selling in some cases) in Canada is using a crypto ATM . 

Mainly found in the bigger cities (see map below), crypto ATMs work by accessing a cryptocurrency exchange directly to convert cash into crypto or vice versa.

Rather than connecting to a bank account (like a regular ATM), crypto ATMs connect to a user’s crypto wallet (usually via a QR code). Transactions are processed directly on the blockchain chosen and recorded in the user’s wallet.

To use Bitcoin ATMs, users must already have a crypto wallet and understand how to make a crypto transaction.

Some crypto ATMs only provide a buying service, whereas bi-directional ATMs let users also sell crypto, spitting out cash directly (like a regular ATM).

Source: coinatmradar.com

Best Crypto Exchanges (CEXs) For Canadians 

Each of the three platforms below has been explicitly reviewed for Canadian users.

#1: Bitbuy

Bitbuy is Canada’s most popular crypto exchange and is an excellent choice for Canadians looking for a reliable and secure CEX. It has never been hacked, and its insurance policy covers all assets on its system. Bitbuy’s trading fees are low, charging from 0% to 2% for transactions. They also have excellent 24/7 customer support.

Pros

• Highly secure, with 95% of user funds kept offline
• Fully regulated and transparent exchange
• Excellent customer service
• Insurance coverage for user assets

Cons

• Fewer crypto assets listed than other exchanges
• Deposit and withdrawal fees vary, depending on the cryptocurrency being traded

Key Takeaways

Best for security. Bitbuy’s dedication to security, combined with its unblemished history, renders it a reliable option for crypto investors in Canada.

#2: Coinbase

Global crypto exchange Coinbase has grown in popularity in Canada in recent years. It offers more than 150 crypto assets and a user-friendly interface, which makes it a fantastic choice for investors new to crypto. 

Coinbase also provides staking features to earn your rewards on the crypto assets you hold on the platform.

On the downside, purchasing fees of 3.99% (when using a debit or credit card) are among the highest on any crypto exchange available in Canada. 

However, Coinbase is a publicly traded company in the US, making it highly trustworthy (being more tightly regulated and having strict disclosure requirements).

Pros

• User-friendly interface with an easy purchase process
• Highly secure
• Easy staking of specific crypto assets

Cons

• High fees compared with other exchanges

Key Takeaways

Best for all users: Coinbase’s notoriety and ease of use make it an appealing choice for new crypto investors. Its staking feature adds to its appeal and makes it a top choice for Canada’s best crypto exchange.

#3: Wealthsimple

Toronto-based crypto exchange Wealthsimple is a great choice for new investors due to its excellent educational resources and easy-to-use interface. 

The platform offers a zero percent minimum balance, attracting users of all investment levels.

Wealthsimple does have higher-than-average fees (not as high as Bitbuy) and a much smaller list of crypto assets available (although those it does offer are more reputable). Gemini Trust and fully insured hold assets available on the platform.

Pros

• Beginner-friendly platform
• Strong security measures
• Excellent educational library
• Well-vetted crypto assets listed

Cons

• Limited features for advanced traders
• Higher transaction fees compared to other platforms

Key Takeaways

Best for new users. Ease of use, educational resources, and high security make Wealthsimple an excellent choice for new users looking for a centralized exchange. 

Purchase Your First Cryptocurrency: Step-by-Step Guide

These steps are universal regardless of which centralized platform (CEX or CeFi).

Step 1

Download the CeFi app or go to the CEXs’ website and go through the straightforward sign-up process, like you’d sign up for any financial or banking app.

Step 2

Perform the “Know Your Customer” (KYC) verification process. You must provide personal details, like name, address, etc., and pictures of your government ID (Passport or Driver’s license). 

This process is nothing to worry about; it helps keep fraudulent actors out of the industry. Once you have supplied the relevant information, it can take a day or two to go through.

Step 3

Finally, you need to add funds to your account. Each platform has various methods to deposit your fiat currency (CAD):

• Bitbuy: Interac e-Transfer
• Coinbase: Bank transfer or debit card
• Wealthsimple: Bank transfer, Interac Transfer, or debit card

Once your account has been funded, you are ready to purchase your crypto.

Is It Legal to Buy Cryptocurrency in Canada?

Although it is not considered legal tender (as it is in El Salvador), buying, selling, and trading cryptocurrency in Canada is legal. Legal tender status means a currency has been approved as an official currency by the government and has to be accepted for transactions anywhere within that country.

You can legally spend crypto with retailers (bricks and mortar or e-commerce) who accept them, but you can’t use them to make formal payments to the government, e.g., taxes. 

Bitcoin and other cryptocurrencies are regulated under Canadian securities legislation.

Note: Under Canadian law , a security is defined as something that has, among other things, the expectation of future profits that arise from some common enterprise.

Why This Matters 

Choosing the type of platform you use to buy crypto is personal to your situation. Your investment experience, familiarity with crypto, and the amount you want to invest all play a part. Do as much research into the type of platform you want to use as you do the crypto asset you want to invest in. 

Always do thorough research and only invest what you are comfortable losing.

FAQs