How to Buy Crypto in Your TFSA

Updated: Sep 20, 2022  |  Published: Mar 9, 2021

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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.

Don't want to read? Watch my video below:

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:

  1.  Bitcoin ETF
  2.  Ethereum ETF
  3.  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

Purpose Bitcoin ETF

TSX: BTCC

1.50% max

1.00%

🇨🇦 Canada

Ninepoint Bitcoin ETF

TSX: BITC

1.45%

0.70%

🇨🇦 Canada

Fidelity Advantage Bitcoin ETF

TSX: FBTC

0.95%

0.40%

🇨🇦 Canada

Evolve Bitcoin ETF

TSX: EBIT

1.82%

0.75%

🇨🇦 Canada

CI Galaxy Bitcoin ETF

TSX: BTCX

0.95%

0.40%

🇨🇦 Canada

3iQ Coinshares Bitcoin ETF

TSX: BTCQ

1.25% max

1.00%

🇨🇦 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

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

Square

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

Table updated May 23, 2021

If you want to explore more crypto related stocks, BitcoinTreasuries.org 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

  • Tax-free gains - If you think crypto will grow a lot, this has the potential to save you a lot of capital gains tax in the future. This is the biggest factor to consider
  • Convenient - If you already have a TFSA, you don't have to sign up for a crypto exchange and figure out how to store your crypto
  • Easier for beginners - Crypto can be overwhelming when you're first getting started and a TFSA might be easier to navigate
  • Can't buy 99% of altcoins - There are 1000's of altcoins out there but if you want crypto in your TFSA, you are limited to crypto-backed ETFs and crypto related stocks
  • Management fees (ETFs) - Bitcoin and Ethereum ETF fees range from 0.40%-1.00% right now
  • You don't own the crypto - Someone is storing crypto on your behalf and you can't self-custody it. This defeats the fundamental purpose of decentralization
  • You can't move the crypto - Since you don't own the crypto, you can't do anything with it like withdraw it, send it to different wallets, earn interest on it, stake it, trade it for other altcoins, take loans out against it, etc. It's stuck in your brokerage account until you sell it

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

Wealthsimple Trade

  • Best for beginners
  • Zero-commissions (on stocks)
  • $0 account minimum
  • $25 free when you deposit $150
Questrade

Questrade

  • Advanced charts & tools
  • $4.95-$9.95 per trade
  • Free ETF purchases
  • Margin, options, and more

More Info

Can Crypto Be Held in a RRSP?

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. 

Do You Pay Tax on Crypto in Canada?

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

Is Wealthsimple Crypto a TFSA?

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.

Alex Dabek

RankFi.com (Contributor)

Alex is the owner of RankFi.com, where he covers all things Web3 and cryptocurrency. He's been passionate about blockchain technology since 2017 and has reviewed more than 100 crypto exchanges, brokers, and DeFi applications.