The process of selling Bitcoins used to be tough, even the most advanced users had trouble selling their Bitcoins back then. However, as technology advances and cryptocurrency trading becomes more popular, the process for selling Bitcoins has become easier than it used to be.
Selling Bitcoin is just like the foreign exchange of fiat currencies like the Canadian dollar, US dollar, or Euro. You trade coins that you have at the market exchange rate for Cash. In this guide, we will show you how to sell your Bitcoins easily.
4 Ways of Selling Bitcoins in Canada
- Online Exchanges
- Bitcoin ATMs
- Peer-to-Peer (P2P)
- Over-the-Counter (OTC)
Online exchanges are the most popular way of selling Bitcoins in 2020. There are several Canadian Exchanges you can use to sell your Bitcoins, such: Coinberry, Coinsquare, Shakepay, and Bitbuy.
The most popular one these days is Coinberry because of its fast and reliable service. Their customer service is expeditious and complete; they answer all your Bitcoin and other cryptocurrency-related questions. Coinberry makes the selling process so much easier by having a user-friendly and straight-forward platform. You can sell your Bitcoins in less than 10 minutes on Coinberry platform.
There are 757 Bitcoin ATMs in Canada according to CoinAtmRadar. However, unfortunately, not all of these ATMs offer Bitcoin Selling services. The ones offer the service usually charge high fees. The fees may vary but it is usually around 5% to 11%, depending on the ATM. We don’t recommend using these ATMs because of their high fees.
The most common platform for this is LocalBitcoins.com. For each transaction that is conducted, Localbitcoins.com offers an escrow service to protect the buyer of the Bitcoin. This method is good for selling a high quantity of Bitcoins or keeping your anonymity. If you’re not buying over $10,000 worth of Bitcoins, we would recommend going with an Online Exchange as it’s more convenient and fast to complete the transaction.
Over-the-counter is mainly for large amounts of quantity Bitcoin selling. If you are planning to sell over $50,000 worth of Bitcoins OTC is the way to go. If you buy or sell Bitcoin on OTC, you will need to comply with jurisdictional ‘Anti Money Laundering’ and ‘Know Your Customer’ regulations — which means submitting paperwork that proves your identity.
We have gathered some common questions here regarding selling bitcoins:
1. Do you have to pay taxes on Bitcoin?
Yes, you have to pay taxes on Bitcoins if you make capital gains when you sell.
Cryptocurrency is taxed like any other investment instruments in Canada. 50% of the gains are taxable and added to your income for that year. For instance, you bought some Bitcoin for $10,000 and sold it later for $30,000. You would have to report a capital gain of $10,000 (50% of $20,000) which would be added to your income and taxed at your marginal tax rate.
For more information check out this government website.
2. Do you have the option of trading cryptocurrency in your TFSA or RRSP?
3. What if you decide not to report your cryptocurrency gains?
This is a very common question asked by many cryptocurrency traders. If you don’t report your cryptocurrency gains, you would be breaking the law. It’s called tax evasion and it is a serious crime that could get you sent to jail.
If you fail to report your taxes, the CRA could charge you penalties and that could cost you a fair amount of money at the end. CRA can track the movements of coins and illicit earnings. Make sure to report your earnings from transactions involving cryptocurrency.
4. What about gains from mining cryptocurrencies?
You’d have to report your gains if you are making a profit from mining cryptocurrencies. In this case, it would be wise to seek the legal advice of an accountant who has experience with cryptocurrencies.