You've invested in crypto, and now it's time to take some profits. Cashing out your cryptocurrency into Canadian dollars can seem daunting at first, but it's actually a straightforward process once you know the steps.
This guide will walk you through the most common and effective methods for turning your Bitcoin, Ethereum, or other digital assets into real money in your Canadian bank account.
Method 1: Using a Canadian Cryptocurrency Exchange (Most Common)
This is the easiest and most popular way to cash out. Using a regulated Canadian exchange like Wealthsimple, Newton, Shakepay, or NDAX is your best bet. The process is generally the same across all platforms.
Step-by-Step Guide:
- Choose and Verify Your Account: If you don't already have an account on a Canadian exchange, you'll need to sign up and complete the identity verification (KYC) process.
- Deposit Your Crypto: If your crypto is in a private wallet (like Ledger or MetaMask), you need to send it to your exchange wallet. Find the "Deposit" or "Receive" button on the exchange, select the correct cryptocurrency, and copy your unique deposit address. Send the crypto from your private wallet to this address. Double-check the address is correct!
- Sell Your Crypto for CAD: Once the deposit is confirmed, go to the trading section of the exchange. Select the trading pair (e.g., BTC/CAD) and sell your cryptocurrency for Canadian dollars.
- Withdraw CAD to Your Bank: After the sale, you'll have a CAD balance on the exchange. Navigate to the "Withdraw" section, select Canadian Dollars, and choose your withdrawal method. The most common options are Interac e-Transfer or a direct bank transfer (EFT).
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Method 2: Peer-to-Peer (P2P) Exchanges
P2P platforms connect buyers and sellers directly. You can post an ad to sell your crypto, and a buyer will pay you directly using a method you both agree on, like an e-Transfer. While you can sometimes get a better rate, this method carries more risk and is generally recommended for more experienced users.
Method 3: Bitcoin ATMs
Some Bitcoin ATMs also allow you to sell crypto for physical cash. The process usually involves sending crypto from your wallet to a QR code on the ATM, which then dispenses cash. However, be aware that Bitcoin ATMs have very high fees (often 10-20%) and are not practical for large amounts.
Don't Forget About Taxes!
Selling your crypto is a taxable event in Canada. The Canada Revenue Agency (CRA) views crypto as a capital property. You must calculate your capital gain (or loss) for every sale and report it on your annual tax return. Keep detailed records of when you bought your crypto and for how much.
Quick FAQ on Cashing Out in Canada
What is the fastest way to cash out crypto in Canada?
The fastest way is typically using a Canadian cryptocurrency exchange that supports Interac e-Transfers for withdrawals. Once you sell your crypto for CAD on the platform, the e-Transfer to your bank account can often arrive within minutes to a few hours.
Do I have to pay taxes when I cash out crypto in Canada?
Yes. In Canada, cryptocurrency is treated as a commodity, and selling it is a taxable event. You must report any capital gains (the difference between the price you bought it for and the price you sold it for) on your tax return. It's crucial to keep good records of all your transactions.
Can I cash out directly from a private wallet like Ledger or MetaMask?
No, you cannot cash out directly from a private wallet to a bank account. A private wallet can only send and receive crypto. You must first send the cryptocurrency from your private wallet to a centralized exchange, sell it for Canadian dollars there, and then withdraw the CAD to your bank.