If you want to legally avoid taxes on your cryptocurrency investments in Canada, you have the option to buy and invest crypto in your TFSA.
There are multiple approaches you can take, however, there are also some downsides and limitations you need to be aware of. In this post, I'll show you what your options are and the pros and cons of tax-free crypto in Canada.
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Can You Buy Cryptocurrency in a TFSA?
If you want to buy cryptocurrency in your TFSA you have 3 main options: A Bitcoin ETF, an Ethereum ETF, or crypto-related stocks. You cannot hold Bitcoin or altcoins in your TFSA directly. Since there's 15,000+ altcoins, 99% of coins are not eligible to be in your TFSA.
This means you cannot buy digital currencies on a crypto exchange like Coinbase and put that in your TFSA. Crypto exchanges only let you open non-registered accounts. TFSA's can only be opened through a stock brokerage.
3 Ways to Get Crypto Exposure in Your TFSA
At the time of this writing, you can only get crypto exposure through stocks and ETFs that are traded on the stock market. There are 3 choices available:
- Bitcoin ETF
- Ethereum ETF
- Crypto-related stocks
These options are pretty limited compared to the thousands of altcoins out there, but this is what's available for Canadians at this time. Let's explore these three options below.
Option 1
Canadian Bitcoin ETFs
The first way to get crypto exposure in your TFSA is with a Bitcoin ETF. As of this writing, Canada has approved 6 Bitcoin ETFs:
Name | Symbol | MER | Management Fee | Country | Website |
|---|---|---|---|---|---|
Fidelity Advantage Bitcoin ETF | TSX: FBTC | 0.95% | 0.40% | 🇨🇦 Canada | |
CI Galaxy Bitcoin ETF | TSX: BTCX | 0.85% | 0.40% | 🇨🇦 Canada | |
3iQ Coinshares Bitcoin ETF | TSX: BTCQ | 1.29% | 1.00% | 🇨🇦 Canada | |
Ninepoint Bitcoin ETF | TSX: BITC | 1.45% | 0.70% | 🇨🇦 Canada | |
Purpose Bitcoin ETF | TSX: BTCC | 1.50% max | 1.00% | 🇨🇦 Canada | |
Evolve Bitcoin ETF | TSX: EBIT | 1.82% | 0.75% | 🇨🇦 Canada |
Option 2
Canadian Ethereum ETFs
A second way to gain exposure to crypto in your TFSA is through an Ethereum ETF. Currently, there are 4 Ethereum ETFs approved in Canada:
Name | Symbol | MER | Management Fee | Country | Website |
|---|---|---|---|---|---|
CI Galaxy Ethereum ETF | TSX: ETHX | 0.89% | 0.40% | 🇨🇦 Canada | |
Fidelity Advantage Ether ETF | TSX: FETH | 0.95% | 0.40% | 🇨🇦 Canada | |
Evolve ETHR ETF | TSX: ETHR | 1.23% | 0.75% | 🇨🇦 Canada | |
3iQ Coinshares Ether ETF | TSX: ETHQ | 1.24% | 1.00% | 🇨🇦 Canada | |
Purpose ETHR ETF | TSX: ETHH | 1.50% max | 1.00% | 🇨🇦 Canada |
Option 3
Crypto Related Stocks
A more indirect way to gain exposure to Bitcoin and crypto in your TFSA is to buy crypto related stocks. You can research companies with Bitcoin on their balance sheet, crypto exchanges, crypto mining companies, blockchain companies, and more.
Name | Symbol | Info | Website |
|---|---|---|---|
Microstrategy | NASDAQ: MSTR | Holds bitcoin | |
Tesla | NASDAQ: TSLA | Holds bitcoin | |
Coinbase | NASDAQ: COIN | Crypto exchange | |
Voyager Digital | CNSX: VYGR | Crypto exchange | |
Block Inc. | NYSE: SQ | Crypto exchange | |
PayPal | NASDAQ: PYPL | Crypto exchange | |
Hut 8 Mining | TSX: HUT | Mining company | |
Riot Blockchain | NASDAQ: RIOT | Mining company | |
Hive Blockchain | CVE: HIVE | Blockchain |
If you want to explore more crypto related stocks, Bitcoin Treasuries tracks all publicly traded companies that hold Bitcoin on their balance sheet. This list is constantly growing as Bitcoin adoption continues. You can also visit our own Crypto Stocks & ETFs page.
Pros & Cons of Crypto in Your TFSA
Where to Buy Crypto ETFs and Stocks in Canada
Two of the best places to buy stocks in Canada are Wealthsimple Trade and Questrade. They both offer low fees compared to the rest of the industry, lots of features, and a good user interface.
Wealthsimple Trade
- Best for beginners
- Zero-commissions (on stocks)
- $0 account minimum
- $25 free when you deposit $150
Questrade
- Advanced charts & tools
- $4.95-$9.95 per trade
- Free ETF purchases
- Margin, options, and more
More Info
It's the same as your TFSA. You cannot buy crypto directly in your RRSP, but you can buy Bitcoin ETFs, Ethereum ETFs or crypto related stocks to get exposure to the price.
If you hold anything in your TFSA, capital gains are not taxable. However, if you buy crypto directly, such as through a crypto exchange, you are required to pay taxes according to the CRA's crypto tax guide.
According to their website, Wealthsimple Crypto is not a TFSA. It is a personal and non-registered account. If you want exposure to crypto in your TFSA, your options are a Bitcoin ETF, Ethereum ETF or crypto related stocks.
Summary
If you want crypto in your TFSA, your three main options are buying a Bitcoin ETF, Ethereum ETF or a crypto-related stock. Since there are over 19,454 cryptocurrencies on CoinMarketCap, 99% of coins cannot be put in your TFSA.
You have to weigh out the pros and cons of this approach. Maybe you'll want to do a mix of both but hopefully this post helped you understand how buying crypto in your TFSA works.
