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Is Bitcoin Legal in Canada?
https://reviewmoose.ca/blog/is-bitcoin-legal-in-canada/#:~:text=
EMA BLIZNOVSKA APRIL 6, 2022
While many countries embrace direct contact with digital currencies like Bitcoin, others are banning or restricting the use of crypto. In Canada, online and brick-and-mortar stores, as well as other businesses, are open to non-traditional payment methods. But this doesn’t necessarily answer the all-important question: is Bitcoin legal in Canada?
The short answer is yes. But unlike in El Salvador, Bitcoin isn’t a legal tender in Canada. The following guide breaks it all down.
The Legality of Bitcoin in Canada
The Canadian government permits all interested parties to buy, sell, hold, and trade Bitcoin. It also allows purchases of goods and services with digital currencies at any establishment that accepts this form of payment.
Crypto is increasingly popular among consumers who frequent online retailers at a time when the online shopping industry is booming.
That said, there are certain limits on how Bitcoin can be used in Canada because the currency isn’t considered a legal tender.
Legal Limitations of Using Bitcoin
Although Bitcoin is legal in Canada, it’s not supported by any authority, including the Bank of Canada. Therefore, it isn’t considered a legal tender, a label reserved solely for the Canadian dollar.
This translates into limited adoption. No institution or business is legally required to accept Bitcoin as a form of payment, and Canadians cannot use it to pay for government-related services or to cover their taxes.
The absence of concrete Bitcoin regulations in Canada poses another problem for those using the currency. Since Bitcoin isn’t a legal tender, there are no real protections, such as the federal insurance provided to savings accounts that hold Canada’s official currency.
Bitcoin Mining in Canada
Bitcoin mining is the process of generating new coins by using sophisticated hardware to solve mathematical equations. The miners who solve the equations receive blocks of verified transactions that are added to the blockchain. This is a highly technical, complex, and costly process.
There’s no specific blockchain law that bans cryptocurrency mining. Therefore, Bitcoin mining is legal in Canada. What’s more, Canada was the fourth-largest Bitcoin mining destination in August 2021 after the practice was banned in China.
Bitcoin Law in Canada
Canada’s federal government doesn’t place restrictions on mining and allows the use of Bitcoin and other cryptocurrencies. However, regulations for crypto assets may vary by province.
Bitcoin in Ontario
When it comes to individual provinces, Bitcoin regulations in Canada typically come in the form of consumer protection laws. For its part, Ontario has a securities commission that administers and enforces securities legislation.
In June 2021, the oversight body started taking action against non-compliant cryptocurrency exchanges while following federal Bitcoin regulations in Canada. The clampdown affected the operations of giants like Binance, which wasn’t registered in the province and was ordered to halt all transactions involving Ontario residents. As such, existing regulations may limit your options when it comes to using your Bitcoin.
Bitcoin in Manitoba
Like Ontario, Manitoba has its own regulatory entity — the Manitoba Securities Commission.
While no blockchain law prevents you from owning and using your cryptocurrency in Manitoba in ways that comply with federal law, the province witnessed a sharp increase in the number of fraudulent online investment websites which were promoting Bitcoin trading, among other options.
Towards the end of 2021, the Commission outlined common red flags associated with fraudulent sites, which include the promotion of Bitcoin and companies that aren’t registered to do business in Manitoba.
Bitcoin in Alberta
So, is Bitcoin legal in Canada’s Alberta? This province is actually home to Binance’s principal regulator in Canada. That’s because the Alberta Securities Commission doesn’t have the same hardline stance toward crypto exchanges as their counterparts in Ontario.
Not only is it legal to own and use Bitcoin in Alberta, but the province is also emerging as a great location for Bitcoin mining.
Bitcoin in British Columbia
While the British Columbia Securities Commission is focused on protecting investors, its regulatory approach is also designed to accommodate innovative models for bitcoin and broader crypto use. That said, the Commission expects all platforms that facilitate crypto trading to comply with all relevant securities legislation. Just like the rest of Canada, British Columbia allows residents to hold, trade, and mine Bitcoin.
Bitcoin in New Brunswick
Like in other provinces, Bitcoin can be exchanged for goods and services in New Brunswick, and there is no blockchain law that prohibits residents from using digital assets as an alternative to fiat money.
Individuals and businesses can hold and trade Bitcoin, but those who choose to do the latter must stick to crypto asset trading platforms that are registered with the appropriate securities regulator.
Bitcoin in Nova Scotia
Nova Scotia is another province where it’s entirely legal for you to own and use your Bitcoins.
However, just like in other parts of the country, the Nova Scotia securities regulatory entity issued a warning on the dangers of cryptocurrency scammers and other bad actors.
Bitcoin in Quebec
Quebec adheres to the same federal laws as other provinces when it comes to holding, using, and trading crypto. There are a number of crypto exchanges that offer their services in Quebec. Bitcoin is a recognized currency with which you can buy goods and services, but, of course, it isn’t a legal tender. Bitcoin taxes in Canada apply to all capital gains and business income, and Quebec is no exception.
Bitcoin in Prince Edward Island
Crypto regulations in Prince Edward Island are aligned with broader crypto and Bitcoin laws in Canada. Residents are permitted to hold, use, and mine Bitcoins without limitations that haven’t already been defined by federal law.
Some of the Bitcoin exchanges in Prince Edward Island include Coinbase, Binance, OkCoin, Paybis, and Kraken.
Bitcoin in Newfoundland and Labrador
Bitcoin is perfectly legal in Newfoundland and Labrador. Some of the most popular exchanges to buy Bitcoin in this province are Binance, CEX IO, OkCoin, and, of course, Coinbase.
Bitcoin in Saskatchewan
Bitcoin is legally recognized as a commodity you can own and use in Saskatchewan. Bitcoin mining is also legal here, and all the regulations concerning Bitcoin are in line with the federal blockchain law. Popular exchanges in Saskatchewan include Coinbase, Binance, and OkCoin.
Bitcoin in Canadian Territories
The three Canadian territories are Northwest Territories, Yukon, and Nunavut. The use of cryptocurrencies in these territories is also covered by Canada’s federal regulations. In other words, there are no specific laws that prohibit the use and holding of Bitcoin.
Bitcoin Taxes in Canada
The Canada Revenue Agency has a special department for taxing all capital gains or business income generated with Bitcoin and other cryptocurrencies. The relevant laws on Bitcoin taxes in Canada are included in the Income Tax Act. You aren’t taxed for holding or simply acquiring Bitcoins, but Canadian law requires you to disclose all income from a business source or capital gains from disposing of crypto.
Pros and Cons of Using Bitcoin in Canada
We started out by asking a simple question: is Bitcoin legal in Canada? By now, you know that you can legally use this digital currency in this country. But that poses another important question: what are some of the advantages and disadvantages of using Bitcoin?
The Advantages of Bitcoin
Bitcoin is still a relatively new concept and a revolutionary shift in the realm of finance. It’s a decentralized and completely independent asset that you can buy, sell, and trade without an intermediary.
It’s supported by a number of vendors, and a growing number of people in Canada are using it instead of the local currency. Furthermore, Bitcoin can be used to diversify investment portfolios away from stocks and bonds.
The blockchain verification codes that are in place make the Bitcoin network both secure and trustworthy and ensure that your transactions remain anonymous. That said, it’s important to remember that Bitcoin taxation in Canada is regulated by the government. Whenever the crypto used in transactions gains in value, you’ll incur capital gains taxes.
The Disadvantages of Bitcoin
Not having a central authority to keep tabs on currency transactions has its share of both pros and cons. One of the more obvious downsides related to Bitcoin and its legal status in Canada is the absence of certain protections that are applied to transactions and accounts with fiat currencies.
Another downside of Bitcoin is its irreversibility. It’s impossible to track or trace any transactions with Bitcoin. That also makes any damages or aftermath of fraudulent activities completely impossible to undo.
Canadian laws still don’t recognize Bitcoin as legal tender. So, essentially, it doesn’t hold the same legal weight as the Canadian dollar.
It can be used for buying goods and services just like any other currency, but there’s a catch. Not all sellers accept Bitcoin payments, nor are they legally obligated to do so, which isn’t the case with the country’s national currency.
Another downside of paying with and receiving your payments in Bitcoin is directly linked to the Bitcoin taxes in Canada, where taxpayers are legally required to report their full income regardless of which currency they are using. Bear in mind that you’ll have to convert all your Bitcoin gains and losses to Canadian dollars before reporting them on your tax returns.
Conclusion
These days, it’s increasingly hard to ignore Bitcoin as it keeps notching new record highs, and its adoption rates are skyrocketing. So, it’s perfectly logical to ask: is Bitcoin legal in Canada? Our guide explains how you can use and trade crypto and some of the limitations stemming from the fact that it isn’t considered a legal tender.
Of course, all your Bitcoin investments should be conducted with a dose of caution. This is still a volatile market, and it’s important to be well informed before making any decisions on the matter.
Canada has made significant progress in recent years in accommodating cryptocurrencies users and legally defining operations within the country’s federal law.
FAQ
Is buying Bitcoin legal in Canada?
Buying Bitcoin is legal in Canada. You can do so in any Canadian territory or province. But some provinces have issued warnings and guidelines to help residents better understand the process of buying and selling Bitcoin and avoid getting scammed.
Is Bitcoin mining legal in Canada?
Bitcoin mining is legal in Canada. Furthermore, Canada is becoming one of the best places in the world for Bitcoin mining. Although some jurisdictions offer a more favourable environment than others, the country has plenty of cryptocurrency mining potential.
Who accepts Bitcoin in Canada?
Any Canadian company can legally accept Bitcoin payments. Some of the more prominent Canadian companies that support Bitcoin include Park and Finch Eyewear, Best Sleep, Toronto Brewing, Coincards, and Ledger.
Along with using it as a way of payment, you can also use it as security for making a secured personal loan in Canada with specific lenders.
Can you use Bitcoin in casinos in Canada?
Yes, you certainly can. There are many Bitcoin casinos with online platforms that allow you to play your favourite games with crypto.
Ema Bliznovska
Ema is an ESL teacher (who is highly curious about technology in education) and a content writer. She enjoys writing on all sorts of subjects and she loves a good challenge. When she’s not working, you can find her reading a mystery thriller or watching “Shutter Island” for the umpteenth time.
