Canada’s relationship with blockchain and cryptocurrency has had dramatic highs and lows.
Though some world-leading blockchain technology like Ethereum started as Canada-based projects, Canada has not embraced crypto with the same zeal as some other countries. And unfortunately, bad actors in the crypto community have given Canadian regulators and the public reasons to worry.
The Canadian crypto ecosystem has been slapped three times in the past two years. In January 2019, QuadrigaCX made global news when Gerald Cotten, the 30-year-old co-founder and CEO of Vancouver-based crypto exchange, QuadrigaCX, died while on honeymoon in India.
He was, it seems, the only person with access to $190 million of funds in crypto and fiat money, which was the majority of funds stored on the exchange.
In November 2019, Einstein Exchange, Vancouver, British Columbia-based crypto exchange, suddenly closed its operation, literally locking its physical location while founder Michael Ongun Gokturk went missing. British Columbia Securities Commission (BCSC) took control of the Einstein Exchange and investors were owed C$16 million.
In July 2020, Toronto-based Coinsquare was found to have been engaged in “wash trading”, with 90% of transactions faked between Q4 2018 and Q1 2019. Coinsquare CEO Cole Diamond, founder Virgile Rostand, and executive Felix Mazerwere found to have knowingly “authorized, permitted or acquiesced” to the fraudulent practice. Over C$2 million in fines were paid and all three men resigned.
However, despite the highly publicized scandals, the Canadian government seems to value the potential of blockchain and crypto at a macro level.
Deloitte’s 2020 Global Blockchain Survey recently showed that COVID-19 has advanced the adoption of blockchain just as it has increased digital adoption, globally. The survey showed that 76% of Canadians see cryptocurrency as an alternative to fiat currency.
So what is the best way to buy Bitcoin in Canada?
Canadian Crypto Exchanges
Here is an overview of some of the leading exchanges serving Canadian audiences.
1. Coinsquare
Since 2015, the Toronto-based Coinsquare has been dedicated to providing a safe, affordable, and simple way for users to exchange cryptocurrencies online. The company has grown in the past few years -- but the scandal of this year and resignation of leadership has hurt its reputation and sent many users looking for another solution.
Pros
- With 5 fiat currencies and 10 cryptocurrencies available to trade, there are many options for the users.
- Coinsquare employs all standard security measures to ensure safety and privacy. Through storing 95% of all funds in offline cold wallets, extensively testing its technology against distributed denial of service attack (DDoS), and having close relationships with a number of Schedule 1 Canadian Banks.
- Though its site’s simple UX seems to be catered towards entry-level traders, they have also done a lot of work to attract and support high-networth investors by opening up a mining venture arm and a capital markets division.
- They offer a program for Coinsquare Wealth, targeted to more advanced traders. It is an exclusive service for those who trade over 25k worth of orders at a time. Users receive exclusive benefits including discount funding/withdrawal fees, faster withdrawal speed, and a dedicated wealth director.
Cons
- There are only two ways of depositing money, through e-transfer or wire transfer.
- With deposit processing times of 1-3 days and withdrawal processing times of 1-9 days, the overall process can be frustrating, especially since they place withdrawal holds.
- Its fees are among the highest of all exchanges.
- Ethical issues concerning the exchange’s business practices have given many users misgivings concerning doing business with Coinsquare. It will be up to new leadership to rebuild that trust however they can.- based 2FA user account security system was proven to be insecure in the past.
2. NDAX.io
Founded in 2017 in Calgary, NDAX.io’s goal is to make it easier and faster for people to buy bitcoin in Canada.
(Disclosure: I work with NDAX.io as one of my clients when I’m not writing articles.)
They keep a physical office, a support line for resolving issues by phone, relationships with traditional banks, and have worked proactively to stay ahead of the regulatory curve, so they offer a mix of traditional economy accessibility and support and leading-edge security and compliance.
Pros
- NDAX offers a clean, easy trading platform that doesn’t overwhelm newbie crypto investors and makes transactions fast.
- NDAX.io offers leading security on their platform with 95-98% of digital assets offline in cold storage. It uses multiple data servers which are monitored 24/7 and employ Multi-Signature technology to keep assets secure.
- To fund your account, you can use Interac e-transfer, Wire Transfer, or Bank Draft / Certified Cheque.
- For support, they offer live chat on the site, email, and phone support.
- NDAX is registered as a Money Service Business (MSB) with FINTRAC. They work closely with regulators to meet the requirements of today and regulations that are not yet in effect, essentially future-proofing its business from a regulatory POV.
- NDAX allows you to buy and sell 8 coins including Bitcoin, Ethereum, Litecoin, XRP,, EOS, Dogecoin, Cardano and Stellar. They have announced that they will be offering 4 new coins/pairings in Q3 2020.
- NDAX offers low fees that are especially advantageous for more experienced traders - no fee on deposits, flat fee withdrawals and 0.20% trading fees.
- NDAX registration process is quick (approved within 15 minutes) and relatively simple. If you do have any problems, its support is very responsive. It also offer training guides, advanced trade training, and product tours to help you get up to speed.
Cons
- NDAX is devoted to serving a wide range of Canadian users -- meaning its finest points are not terribly sexy from an outside POV. Security, compliance, transparency, and user-centric customer service are important to have but don’t make exciting sound bytes.
- Users accessing more advanced trading features may find themselves quickly out of their comfort zone.
- NDAX doesn’t have the international capabilities of larger exchanges like Kraken, which means you may have to use other exchanges as well to deal with multiple fiat currencies, etc.
American Crypto Exchanges that Serve Canadian Residents
Below are crypto exchanges based out of the United States that serve Canadians.
3. Coinbase
Founded in San Francisco in 2012, the Coinbase mission is to allow anyone to easily and securely access Bitcoin. It offers a simple interface preferred by new crypto buyers.
Pros
Pros
- Coinbase is one of the largest exchanges, supporting over 100 countries and over 30 million customers around the world.
- Coinbase has a wide array of services but its main service allows users to buy and sell Bitcoins through a credit card and debit card.
- Coinbase UX is optimized to the inexperienced buyer.
- Coinbase offers on-platform cryptocurrency conversions allowing users to make complex transactions without leaving the platform. There is a 2.0% fee for conversions.
- Coinbase does have an extensive knowledge base -- but does not have a good reputation for customer support.
Cons
- Fees are relatively high and support can be problematic.
- Coinbase uses a flat fee between $1.50 and $3.00 for transactions below $200 or a percentage of the transaction (whichever is greater).
- Most transaction fees are 1.49% for standard buy and 3.99% for credit card buys -- meaning that credit purchases are potentially quite higher.The market price on Coinbase Pro +0.5%, which is better than with standard accounts but fees are not competitive for larger or institutional buyers.
- Coinbase is rated badly by the Better Business Bureau for failure to respond to hundreds of customer complaints.
- Though Coinbase is popular in Canada, it is not Canada-based which can cause delays in transactions.
4. Kraken
Founded in 2011 in San Francisco, Kraken claims to be the largest Bitcoin exchange in terms of euro volume and liquidity. Its strong reputation is supported by low transaction fees, a wide range of features, and overall security.
Pros
- Kraken follows industry security practices such as keeping 95% of user funds in cold storage, two-factor authentication, and 24/7 surveillance on the exchange so that nothing comes in or out without being monitored.
- They were one of the first exchanges to prove that it was keeping its customers’ money safe using an independent cryptographically-verified audit (proof-of-reserves audit process).
- Kraken offers three different types of accounts (starter, intermediate, and pro) with different limits and features in order to cater to any experience level.
- Its futures and fiat trading are standout features that aren't often found on other exchanges. The ability to trade with five different fiat currencies allows users to make trades without having to visit other exchanges.
- The sign-up process differs based on which account you choose to open. If signing up as a starter account, only basic info is needed. For an intermediate account, the requirements are similar to other exchanges, with photo ID and proof of address. For an advanced account, AML verification and financial statements are needed additionally.
- The verification period on Kraken was very fast (I was verified in about 15 minutes).
Cons
- Kraken is a powerful platform - and also potentially complicated and slow. Though it has many tools available, those who are just starting out may be overwhelmed and confused.
- The process of actually buying cryptos on the site can take a long time. Through creating an account, waiting for verification, depositing fiat currency via bank transfer and waiting 1-5 business days for the deposit to reach the Kraken account in order to finally be able to exchange fiat currency for crypto, takes a long time in comparison to other exchanges.
- Though they say its fees are the lowest in the industry, with a volume-based fee model this is only advantageous to pro-traders.
- Finally, since Kraken isn’t based in Canada, wiring money through an intermediary bank means extra time and fees.
Summary
Based on BTC’s current performance, it’s safe to say that deflationary assets like crypto are gaining traction and have not reached their high-water mark of value. It’s not too late to get on board the “crypto train”. Scandals and widespread adoption aside, the train has barely begun to leave the station.
Based on their individual capabilities, it is likely that a newcomer to crypto investing may want to try several exchanges -- starting with a simpler platform and exploring others as the user looks for more coins and more advanced options.
If there is a lesson to be learned from the global pandemic and economic fallout, it’s that governments are not infallible. So, the average consumer may be better served by diversifying than by keeping all of their liquid wealth in their national currency.
If there is a lesson to be learned from the global pandemic and economic fallout, it’s that governments are not infallible. So, the average consumer may be better served by diversifying than by keeping all of their liquid wealth in their national currency.
Remember -- if you fail to invest in crypto or traditionally traded assets you are NOT opting out of the investing game, you are just keeping all your wealth in one fiat “basket” which history has shown can sometimes go badly, especially during global economic upheavals.
(Disclosure: I work with NDAX.io as one of my clients when I’m not writing articles.)