How to Properly Sell your Bitcoin in Canada
March 16, 2023Table of Contents Contents
Cashing Out Bitcoin
Believe it or not, there are more ways than you would think to sell bitcoin or other digital currencies in exchange for legal tender, also known as fiat currency. That being said, you do have to be careful on what option you choose, you may not get the same value for your bitcoin at each one. That’s why, even though some of these options are going to be easier than others, they may not be the best option for you.
Sell it On an Exchange
As you may have guessed, an exchange is an online marketplace. By using a Canadian crypto exchange, you are likely to get the most value for your bitcoin. With most of these exchanges all you have to do is have an exchange account. Then you can select how much bitcoin you are wanting to sell, what currency you want the money in and what the lowest amount of funds you would accept will be. Then the exchange will help to match you with offers for you to complete the transaction. This process does involve some knowledge and work on your part as well since you are dealing directly with cryptocurrency markets.
With crypto exchanges, keep in mind that there will be plenty of them for you to choose from and they all come with different fees. Even though you may be getting the most money for your investment, you may have to pay a lot in fees so it’s important to keep that in mind when looking for an exchange. If an exchange is the route you are choosing to go, in Canada two of the biggest names are Gemini and Coinbase. There are other choices though, you just want to make sure that you are using a secure exchange.
Use a Broker
Another way a lot of investors choose to cash in their bitcoin is by using a broker. The only difference between using cryptocurrency exchanges and using brokers is that the broker does the transaction on the exchange for you.
Essentially, how it works with a broker service is you just enter what you are selling and what you want for it. From there, the broker goes on the exchange and makes the transaction. Keep in mind it isn’t that simple. Using an exchange can be difficult and you are in a live market when you are there. The broker takes care of this, completes the translation and transfers the funds to your account.
A broker service is ideal if you don’t know much about trading bitcoin, but there are extra fees involved. With most of these broker service sites, you are able to use their instant sell feature and use a broker or you can go on the exchange yourself and sell. The choice is up to you.
Use a Bitcoin ATM
Have you ever heard of a bitcoin ATM? Well, they are different from your traditional ATM in some ways. They are basically standing kiosks that are connected to the internet. With these ATMs, you can process different types of cryptocurrency transactions on the blockchain.
Most bitcoin ATMs only allow you to purchase crypto, but a few of them are starting to allow you to sell/trade it. How it works is the public address of your crypto wallet, then how much you want to sell as well as how you want to receive your money. Most bitcoin ATMs that allow you to sell crypto either give you physical cash or the money is sent to a digital wallet that will support your Canadian dollars. It is important to keep in mind that processing transactions on the blockchain can take anywhere from 1 minute to a few hours. This means it could take a few hours before you see any of your money.
As you probably assumed, there is also a larger fee included when it comes to cashing out bitcoin on an ATM. They are known to charge as much as 10%. If this is a concern for you, this may not be your best option.
P2P Marketplaces
P2P marketplaces, also known as peer to peer, are quite common in Canada. How it works is that these marketplaces connect buyers and sellers of crypto together so they can make direct sales. Some of the most well known ones are:
- LocalBitcoins
- LocalCryptos
- Paxful
- Bisq
While there are some advantages to using P2P marketplaces, such as the ability to receive money using a bunch of different methods, there is also more risk involved.
The fact is, the buyers and sellers on these sites and, even though there are usually escrow systems in play, there are ways around them. With these P2P platforms, you have a much higher risk of losing large amounts of money. Even without considering the financial risk, there is also the legal risk to consider.
Depending on which country you are selling your bitcoin in, it can be seen as business activity and if you aren’t registered as a legal business then there could be legal implications involved. This is important to consider before you start selling your bitcoin off.
Where to Trade/Sell Crypto
If you are looking for a site in Canada that allows you to cash out bitcoin in Canada for Canadian currency, here are a few options:
- Bitbuy
- Binance
- Coinbase
- Kraken
- Crypto.com
- KuCoin
- Bitfinex
- Gemini
- Bitstamp
- Bityard
- Wealthsimple
- NDAX - National Digital Asset Exchange
These are listed in no particular order. The fees you incur with these platforms when you sell bitcoins depends on what platform you choose as well as the market value of your bitcoins. The higher the market value, the larger the payout, the higher the fees.
Cashing Out Bitcoin With Wealthsimple
Out of all of these different crypto selling options, the most well known is Wealthsimple. That is because Wealthsimple is a diverse online brokerage that is used for investing, but many users also use it for crypto. This is because it’s easy and there are no Wealthsimple transfer fees. They also have $0 commission fees. That being said, if you use Wealthsimple for crypto, there will still be transfer fees. This is because this fee is charged by crypto, no by Wealthsimple. The amount of this fee always changes.
That being said, though, cashing out bitcoins with Wealthsimple is easy. All you have to do is select move funds and then sell crypto. You then enter how much you want to withdraw as well as your wallet address. Once you select the preview transfer option it will show you what the transfer fee will be. From there you can complete the transaction.
Withdrawing Crypto Without Paying Taxes
Is it possible to withdraw crypto in Canada without paying taxes? Simply put, the answer is no. The same rules apply to selling crypto that would apply to any other type of investment, such as capital gains tax and business income tax. While you may not have to pay it at the time you withdraw the crypto, it will have to be done when you file your yearly tax return.
The Cheapest Way to Sell Bitcoin
As we mentioned, there are plenty of different ways of selling bitcoin. The cheapest way out of all of these is to use an exchange. In Canada, the platform with the lowest withdrawal fees is Bitbuy. They trade bitcoin at 0.1% on the Bitbuy Pro Platform and have fees of just 0.2% on instant trades. Overall, it’s the lowest cost platform in Canada.
The thing about Bitbuy is their buy minimum is only $50 as well so you don’t need a ton of money to start investing. That being said, if you invest at least $20,000 you will get your own personal account manager.
Even though this is the cheapest one, it may not be the right fit for you so do some research before you make a decision. The fees shouldn’t be the only factor you consider.
Turning Crypto into Cash
After you sell your crypto, how it ends up in your Canadian bank account really depends on the withdrawal method you use. With some platforms you receive the funds through Paypal. With others it goes directly into your bank account. Some, like bitcoin ATMs, require a wire transfer. Others even do bank transfers or Interac E-transfers. Keep this in mind with the platform you choose as well because some of these methods may also incur extra fees.
When and How You Should Cash Out Bitcoin
When it comes to deciding how to cash out your bitcoin, it is important that you do your research before you make your decision. As we mentioned, some methods are more secure than others and people have been known to lose a lot of money when the process goes wrong. Sometimes, even though using a more expensive method like an exchange or a broker may cost you a bit more, the risk is less so it might be more worth it.
No matter when you choose to sell, you can keep in mind the fees, but the most important thing to consider is the BER (Bitcoin Exchange Rate). This is separate from currency exchange rates and isn’t affected by currency exchange rate fluctuations. Because of this, you want to look at the market price of your bitcoin before you sell. It is important to verify that you no longer want to own the bitcoin and/or you have made a profit off of the bitcoin you purchased because once you sell your bitcoin it is gone.
