The trend of using cryptocurrency is rising in Canada as it is in the rest of the world. 39% of youth in Canada are investors in the cryptocurrency market. Cryptocurrency being a digital asset is a need of time as its value is increasing incredibly and has a more significant impact on the emerging digital world. It is a digital asset, existing virtually and emerged as a profitable means to make money.
Financial experts regard cryptocurrency trading as a gateway of opportunities, and the Canadian government is supporting it by offering a friendly environment. It is a great time for Canadians to join the cryptocurrency market and explore the opportunities as the environment is favorable for them.
Globally, Canada is perceived as a friendly and peace-loving country where people follow the rules and their government is understanding to provide them with endless opportunities. Their take on cryptocurrency is very inclusive. As cryptocurrency is brooming, the zero dollar industry that emerged in 2008 is now a million-dollar investment industry with 100% chances of growth in one way or another.
The Canadian government extends all the possible support to cryptocurrency investors. They have launched a government page on crypto affairs to guide their people, haven’t regularized with imposing taxes or any other hurdles, and provided quality platforms where people interested in crypto get reliable services. All goes in huge favor for cryptocurrency traders.
Like other countries, Canadians have faced setbacks in their cryptocurrency journey. The most famous crypto exchange running in Canada, QuadrigaCX, left investors empty-handed without returning any of their assets after the death of its founder. Investors do not have any insurance or legal protections for the amount they put in the cryptocurrency market.
They are not safe from the risks associated with cryptocurrency trading or have access to government-supported crypto platforms. People in Canada are optimistic about the coming time as Vitalik Buterin, the founder of Ethereum blockchain, is paving ways to bring technical innovations to blockchain technology.
Through all the thicks and thins, cryptocurrency is striving in Canada. More people are interested to learn cryptocurrency and getting involved in it. If you are from Canada and interested in cryptocurrencies, this article is for you. Here, you will know all the possible details on how cryptocurrency works in Canada.
An Insight To Cryptocurrency Position Canada
Cryptocurrency attracts people from every corner of the world, and now, there are a number of cryptocurrency traders who engage in purchasing, exchanging, and selling cryptocurrencies through various platforms. From 2013 to 2021, the graph of investment amount and number of people is rising.
As per the Blockchain Transaction report published in December 2021, Canadians have invested 3.74 million Canadian dollars in the cryptocurrency market and received a payout of 2.95 million. Financial experts expect huge investments from the region in the coming years as people have better trading conditions and access to facilities.
Does a question arise from where you can buy cryptocurrency in Canada? There are many leading cryptocurrency trading platforms and exchanges operating in Canada. Most of the platforms running in the United States offer their services to Canadians. The country also has local cryptocurrency firms that serve people with modern services.
CoinSmart, MogoCrypto, CoinBerry, Netcoins, Coinsquare are some of the many platforms that people trust for efficient cryptocurrency trading. These platforms accept payment in CAD, liberating people from the unnecessary hassle of exchanging one currency for another before purchasing digital assets. Due to the market conditions and rising demand in the digital world, exchanges and trading platforms expect more people to join the market in the upcoming years.
The Legal Status Of Cryptocurrency In Canada
Purchasing and selling cryptocurrency in Canada is legal. People can explore various options from the cryptocurrency market without facing regulatory issues and taxes. Unlike other countries that have legalized cryptocurrencies, Canada has not imposed any rules and taxes over cryptocurrency trading. Canada is acting wisely and is dealing tactfully to regularize the digital currency without adding any burden or restriction on the investors.
The Canadian government has taken various steps to support crypto investors all across the country. They have launched an official page to guide cryptocurrency traders about the position of cryptocurrency and how to trade efficiently. The page also issues guidelines to avoid risk, manage funds, and trade safely in the volatile environment of cryptocurrency markets.
Until now, the government has not issued any regularized platform or offered insurance to safeguard the investment amount of investors. The country is offering maximum margin to crypto traders, but it will set new rules to regulate trading. They make use of existing Anti-Money Laundering policies to ensure money going into the cryptocurrency market is of the legitimate source. The law is strictly followed in the country for all traders.
Canadian Securities Administrators is the primary regulatory organization that deals with crypto-related issues. They have a friendly approach towards exchanges and investors, so they implement beneficial laws for them. While imposing the laws, the government also needs to provide insurance or authentic trading platforms to build a better trading environment for all the interested people in cryptocurrency trading. There is also a need to make regulatory laws for blockchain-based games that issue different digital assets for gamers and cryptocurrency gift cards.
As Canada permits cryptocurrency trading and accepts technological advancements, the country has started developing projects for the Canada Border Services Agency and National Research Agency using blockchain technology. Blockchain is a rising technology that offers speed, decentralization, and security of information. The projects are under development and part of an exploration program to understand the utility and benefits of blockchain technology.
As cryptocurrency is entirely legal in Canada, the Central Bank of Canada is also working to issue its digital currency via the Central Bank. This step will further ease the life of cryptocurrency traders in the country while playing an essential part in the regulatory issues.
The Taxes On Cryptocurrency In Canada
Canada is a welfare state, so tax matters have a crucial impact on the economy of the country. The government is stern when it comes to taxes and their collection. Individuals and businesses have a defined set of laws and taxes that they are bound to pay. Delays in paying the tax lead to additional charges on the bill or even punishment if taxes are not paid.
The tax collection process is robust, and the country imposes a tax on all profitable income sources. Although the government of many countries has implemented new taxes and imposed different regulatory laws on cryptocurrency trading, Canada has not imposed any additional taxes on cryptocurrency trading except those implemented under the income tax rules or capital revenue rules.
In Canada, cryptocurrency is taxed by Canada Revenue Agency (CRA). Taxes vary depending on whether you are a business, an investor, a part-time crypto trader, or someone who receives a salary in any cryptocurrency. Cryptocurrency transactions are monitored and accountable to tax on yearly tax season. Let us explore when and how tax is implemented on cryptocurrency transactions.
Selling Your Digital Assets For CAD
Primarily people invest in cryptocurrencies to earn profits. Many people just keep on reinvesting earned profits in the cryptocurrency market, while others also encash it once the value of their digital asset rises. They exchange their digital currency exchanges it for fiat currency. When people exchange their cryptocurrency to CAD, that is, Canadian Dollar, besides paying the exchange fee, their profit amount is subject to capital gains tax. Despite paying taxes, cryptocurrency traders have their fair share of profits against cryptocurrency trading.
The list of cryptocurrencies is increasing day by day. It is reported that there are more than 10000 cryptocurrencies in the world. Traders invest in them as per their choice and feasibility. As the major goal for cryptocurrency trading is to make profits, traders usually invest in cryptocurrency at low value but with a potential to grow. People exchange their owned cryptocurrencies with other cryptocurrencies when they get good value of their assets and better opportunities to invest. Investors prefer exchanging their digital assets instead of selling them for fiat currency. Exchanging cryptocurrency is considered a transaction and subjected to tax under Canadian laws.
Use Cryptocurrency In Daily Activities
Cryptocurrency initially emerged as an investment tool but gradually, it has found ways into our daily lives. Many crypto-friendly businesses permit you to make purchases using your digital assets. Such businesses are mostly online e-commerce stores as crypto is a digital currency and people can make online transactions only.
With the introduction of crypto-cards, the use of cryptocurrency in the physical world has drastically increased and many physical stores accept payment in cryptocurrency. In today’s world moving ahead towards the metaverse, the use of cryptocurrency is expected to increase many folds. Each purchase done using cryptocurrency has implied tax duties.
Receive Your Pay In Cryptocurrency
Yes, you heard it right. Instead of purchasing cryptos using your hard-earned amount, you can also get paid in cryptocurrency. Now many companies pay their employees in cryptocurrency instead of fiat currencies. It is profitable for employees as they get a fixed number of cryptocurrencies every month even if their value increases against the fiat currency. Canada’s income tax laws charge tax on income even if it is in cryptocurrency and not CAD.
The Peer-To-Peer Crypto Transactions
All peer-to-peer crypto transactions of cryptocurrency are monitored, and a tax is applied to all of them. Sometimes, cryptocurrency holders do not use any exchange to perform transactions. Personal sales are as common as people using exchanges for transactions. People also send cryptocurrencies as a gift to their loved ones, family, or friends as it is valuable. The peer-to-peer transactions are central to the concept of the origin of Bitcoin, the first cryptocurrency, as it was introduced to eliminate the role of exchanges or banks from our lives and permitted speedy and safe transfer of assets.
Regular Crypto Trader, Trading Via An Exchange
Suppose you are a regular investor in the cryptocurrency market and are regularly involved in buying, selling or exchanging cryptocurrencies through an exchange. In that case, you are obliged to pay tax over your profit. The Canada Revenue Agency considers trading a permanent income source and applies a capital gains tax on the net profit earned on each transaction. The government applies a tax charge of 50% on the profits earned by trading cryptocurrency in the online cryptocurrency market via an exchange.
Mining cryptocurrencies is a profitable affair and considered barter trade by the Canadian government A 100% tax is applied on any earnings made through mining. Mining requires the use of mining hardware, and miners work hard to mine cryptocurrencies. There are many businesses that have robust machinery for cryptocurrency mining and they earn by building new chains while there are some people who perform mining as a hobby.
The Canadian government has a differentiation strategy as the motive behind mining is different. The part-time miners can enjoy mining without paying any tax to the government, whereas they charge tax on mining from the businesses as it is their source of income. The tax on mining greatly depends on the mining machinery, expertise of miners, motive behind mining, and whether the mining machinery is bought on cash or loan. It is best to consult a tax lawyer to decide the payable tax as per the rules by CRA.
Crypto-Friendly Places In Canada
As more people invest in cryptocurrencies and see their benefit, they want to use them like fiat currency at the places of their choice. With the rising trend of cryptocurrencies all over the world, there are many crypto-friendly places where they accept payments in cryptocurrencies against their product or services. Bitcoin and Ethereum are the two widely accepted cryptocurrencies due to their stable value in the marketplace. Other emerging cryptocurrencies like Cardano, Ltecoin are also acceptable in some places.
There are 1042 cryptocurrency ATMs in Canada. It is the second country after the US, with so many ATMs spread all across the country. Most of these ATMs are Bitcoin ATMs, allowing transactions of Bitcoin only. As per a report, Vancouver takes the lead as it has more than 101 crypto-friendly places, followed by Toronto, Ottawa, and Edmonton with 72, 32, and 23 crypto-friendly places, respectively. People are tempted to use these ATMs but charge massive amounts as transaction fees. Usually, ATMs charge between 5% to 10% on each cryptocurrency transaction.
Cryptocurrency lovers in Canada can avoid these ATMs and spend cryptocurrencies directly at places that accept cryptocurrency to provide products or services. There are many crypto-friendly places in Canada. The list includes restaurants, small cafes, spas, and pubs. Some big companies also favor cryptocurrencies over fiat currencies. Most of them accept payment in Bitcoin only. Using cryptocurrencies has greatly increased in Canada, and many businesses have started accepting cryptocurrencies. Some of the famous crypto-friendly places in Canada includes:
Vancouver: SFU Bookstore, Waves Coffee House, Steamrollers, and more than 100 others.
Montreal: Cafe Aunja, Bar La Caverne, Super Marche Brito, Nectar Flowers, Super Marche Brito, and over 100 others.
Calgary: Sandman Hotel, Colour Bee Painting, Music Center Canada, and several others.
Many banks in Canada have also accepted cryptocurrency as a currency of modern times. Two famous Canadian banks, the National Bank Of Canada and Toronto Dominion (TD) accept cryptocurrency transactions. It is assumed that soon many others will also join the bandwagon.
How To Purchase Cryptos In Canada?
There are many ways to purchase cryptos in Canada, including buying through an exchange as it is the most convenient way. Many international and national cryptocurrency exchanges are available for service. Most exchanges accept deposit and share withdrawal in CAD simplifying cryptocurrency trading for Canadians.
These exchanges offer state-of-the-art services for investors and are trusted among Canadians. The services include the provision of educational material, trading tools, easiness to execute trading activities from the web or mobile-based applications, and many more. These exchanges also provide investors with options to invest in the cryptocurrency of their choice.
Bitcoin, Altcoin, Ethereum are the cryptocurrencies of interest In Canada. People take interest in mining, stacking and purchasing currencies of their choice. They also keep their eye on the legal issues and laws that involve dealing with cryptocurrencies. Many of these exchanges also permit building other digital assets such as NFTs.
Cryptocurrencies are legal in Canada. The government has adopted an open-minded and friendly approach when it comes to dealing with cryptocurrencies at various levels. There are cryptocurrency ATMs, exchanges, crypto-friendly places where people can use their digital assets for their good. Government supports crypto investors by issuing them guidelines through their page.
Like the US or many other countries that have legalized cryptocurrencies, Canada has not implemented additional taxes on investors to limit them from taking part in the cryptocurrency market. The government implements taxes on cryptocurrency transactions under the income tax laws and capital gains tax regulated by the Canadian Revenue Agency. Regulating cryptocurrency transactions is essential to control anti-money laundering activities in the country.
