Canada is one of the many nations that is quite hospitable to cryptocurrencies and digital assets. That being said, if you are new to buying cryptocurrency in Canada, then it is important to inform yourself of the regulations that are in place.
Taxes and Rev Canada
Although cryptocurrency is not considered legal tender in Canada, it is a taxable asset. It is also treated as a barter transaction when you use cryptocurrency to make purchases.
That means that you can make purchases, up to a limit, with cryptocurrencies, and you do not need to include these as taxable income or goods. It is just like a barter system. As such, when you are making an exchange with cryptocurrency, or when you go to buy cryptocurrency in Canada, many transactions can stay off the books.
Rev Canada is only interested when cryptocurrency is being used to operate a business or when there are capital gains.
That means that if your business allows individuals to buy products with cryptocurrency in Canada, you will need to declare this as business income.
In the case of capital gains, it is the same as with any other asset. The cryptocurrency will be assessed at fair market value, and you are required to pay income tax on any gains.
Selling v. Buying: What’s the Difference?
Whether you sell or buy cryptocurrency in Canada, it is the same basic principle.
Selling your Bitcoin is a lot like selling any other stock from your portfolio, except that it is easier. Yes, that’s right. To sell Bitcoin you do not need any kind of advisor or permission from banks etc.
Selling Bitcoin is a lot like selling something on eBay. You simply let others know you via the correct channels that you are looking to sell and wait until you have an appropriate buyer with available funds.
London, not Canada. Still a nice picture though.
What Do I Need?
Bitcoin and other cryptocurrencies are completely digital assets, which means they only exist electronically as strings of data that are encrypted. So if you want to sell and buy cryptocurrency, then you will need a digital wallet.
Digital wallets keep track of your cryptocurrency transaction information, as well as create and store private keys. You need private keys in order for transactions to take place. Private keys are basically just passwords and are necessary to send and receive the funds.
There are countless digital wallets, many of which can be found on cryptocurrency exchanges, so it is really just your personal choice. Go to Cryptowisser.com's crypto wallet list and you'll find the one you might like to use.
Should I Use an Exchange?
Once you are ready to sell your Bitcoin all you really need is a willing buyer. The price of Bitcoin frequently changes and is quite volatile. It is also more valuable in places such as North and South Korea and Venezuela. This phenomenon is often referred to as the “kimchi drift.” Essentially, Bitcoin is more valuable where the fiat currency is unreliable.
So, you might be able to sell your Bitcoin for more to buyers in such or similar nations. However, that requires a bit more savvy, as you will likely need to find the interested buyer via decentralized channels, which is not so difficult, as it is time-consuming.
Brokers and Exchanges
Without a doubt, managed exchanges, such as Coinsmart, are the easiest way to sell your Bitcoin (or buy cryptocurrency) in Canada or anywhere in the world.
Exchanges are third-party brokers that coordinate all the details of purchases and sales. That means you are only ever in contact with the exchange, and they manage all of the other details.
You can also set buy and sell limits on most exchanges. That means that if you can set the desired value you want to sell your Bitcoin for, and once there is a buyer that meets your limit, the sale will close automatically.
Transaction Time and Cost
One consideration for what method to use to sell your Bitcoin is how quickly you want it done. Bitcoin transactions take about 6 hours from send to receive.
With exchanges, you may have to wait for other approvals, and often cryptocurrency is held in escrow to ensure that transaction is fully approved. So, it may take a few days or a week for the sale to go through, as the transaction has to change hands first, and there are a few more checks in place.
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