Is Coinsquare Legal in Canada: Here’s What You Should Know

Published: April 25, 2024 | Last Updated: May 3, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Coinsquare is a cryptocurrency exchange based out of Canada that is registered as a Money Services Business with FINTRAC. According to the Canadian Securities Administrators website, Coinsquare is Authorized to Do Business with Canadians. The company is in a Pre-Registration Undertaking to become

  1. An investment dealer, 
  2. A member of the Investment Industry Regulatory Organization of Canada (IIROC) 
  3. And an alternative trading system (ATS) across Canada. 

The company is also the first crypto platform to be regulated by the Canadian Investment Regulatory Organization (CIRO). This means that depositors’ Canadian dollars are insured by the Canadian Investment Protection Fund (CIPF) if Coinsquare goes bankrupt.  

According to the same source, Coinsqaure is recognized as a Crypto Asset Trading Platform by the

  • Ontario Securities Commission (OSC) 
  • Alberta Securities Commission (ASC)
  • Securities Legislation of British Columbia, New Brunswick, Nova Scotia, and Saskatchewan (BSCS)

Is Coinsquare safe in Canada? 

Coinsquare is an established brand in the Canadian market and one of the largest brands there.

It stores 95% of its crypto assets in cold storage which it sends to recognized providers such as BitGo and Coinbase Trust. Coinsquare Capital Markets Ltd. has also taken out insurance to protect user funds. 

The fact that Coinswuare is a member of CIRO means that your cash balances are protected if the company becomes insolvent.

What does regulatory compliance mean for Coinsquare?

It means that Coinsquare needs to comply with certain regulatory requirements. 

  • Coinsquare needs to collect personal information such as your name, email address, home address, and phone number to comply with Know You Customer and Anit Money laundering regulations. This means that Canadian users will need to verify their ID when they sign up. 
  • The company will also ask for additional information on your source of funds to assess your risk profile. 
  • It will need to issue monthly statements and send out a warning when client assets dip below a certain level
  • Unless dealing with wealthy customers, Coinsquare clients are restricted from trading more than 30,000 CAD in net trading value over a rolling period of 12 months. This rule does not apply to mainstream cryptocurrencies such as Bitcoin, Bitcoin Cash, Litecoin, Ethereum, etc. 

Does Coinsquare report to tax authorities?

Coinsquare likely reports your profits to the Canada Revenue Agency. canadian tax law requires that you pay tax on any capital gains on your crypto assets. To understand this better read my article on how to calculate crypto gains.

Is Coinsquare any good?

Coinsquare is one of the most popular crypto exchanges in the Canadian crypto market. Here are its main features and strengths

1. Coins

Coinsquare supports 50+ coins and over 1300 trading pairs. 

2. Fees

Trading fees

  • Coinsquare Trade and OTC  trading charge a spread on what you trade. The spread varies between 0.5% and 2% which is expensive. The maximum spread can reach 3.85% which is hefty.
  • Coinsquare Pro charges a 0.5% fee for both makers and takers. Compared to other crypto exchanges such as Coinbase, Kraken, and crypto.com those fees are on the higher end. 
  • Staking:  Coinsquare keeps 7-9% of what you earn depending on the coin. You can find the detailed fee schedule here

Deposit and withdrawal fees

Deposits are free whether you use a wire transfer or Interac e-transfer. Keep in mind that for most coins you will need to convert your CAD to USD coin (USDC) which is a stablecoin. So you should add a 0.5% fee if you use the Pro version and more if you use the standard trading version. 

Withdrawals are free if you use Interac e-transfer and 1.5% for direct bank account deposits or wire transfers. Interac withdrawals take up to a day while the other methods can take up to 3 business days. 

3. User experience

The app is available to download on the Google Play Store and Apple App Store. It has a friendly user interface and there is no need to be intimidated by the pro version where you get cheaper fees. 

Areas for improvement

  • There is no option to deposit using a credit card or debit card
  • Limited range of cryptocurrencies
  • Most complaints on Reddit center around the inability to withdraw but these come across as edge cases rather than the norm

Is it safe to leave my crypto on Coinsquare?

Even though your cash is protected that does not mean your crypto is. If Coinsquare goes bankrupt, it means you can wave goodbye to your crypto. Another reason to be wary of leaving your funds on an exchange is that the government can freeze your assets at any time. This is exactly what happened in 2022 during the trucker protests when Canadian crypto exchanges were forced to comply with a court order and freeze assets associated with certain blockchain addresses. 

Finally, if you want to invest in lesser-known and riskier coins you are going to need to use a decentralized exchange and a wallet. Once you set up a wallet you can send your crypto assets from Coinsqaure to your wallet. You can then connect your wallet to a DEX to start trading or simply keep your assets in the wallet. 

Does Coinsquare have a wallet? 

Coinsqaure does not have a non-custodial solution. However, you can easily send your digital assets to other wallets such as Exodus, Ledger, and others. 

Alternatives to Coinsquare

18 cryptocurrency exchanges are registered with the regulatory authorities as crypto asset trading platforms. These include Coinbase, Bitbuy, Bitvo and Coinberry. For a comprehensive list check out my review ranking the best crypto exchanges in Canada.

FAQs

What is the safest crypto in Canada?

All coins tend to correlate with Bitcoin’s behavior. However, Bitcoin itself is very volatile. If you have a short-term perspective you could be exposed to a lot of this volatility. Investors with a long-term horizon worry less about the ups and downs of the market.

In terms of crypto exchanges make sure you use a regulated exchange: Kraken, Coinbase, Bitbuy, and Coinsquare are all solid choices.

Is cryptocurrency legal in Canada?

Yes, you are allowed to hold and trade cryptocurrencies as a Canadian citizen. This does not mean that crypto is legal tender but it does mean that you need to pay taxes on any profits you make from trading

Can Canadians still use Binance?

No Binance has exited the Canadian market following stricter regulations and amidst accusations of embezzling customer funds. If you are looking for a wide range of coins and tokens consider using a wallet and hooking it up to a decentralized exchange.

Is Canada a crypto-friendly country?

According to Lucas Matheson, the Country Director of Coinbase in Canada, Canada is one of the most crypto-aware countries. Legislation wise however it is quite strict. Canadians are restricted in the net amount of crypto assets they can own and major stablecoins such as DAI and USDT are not allowed.

Up Next

Best Canadian Crypto Exchange

Best Canadian Crypto Exchange

In this post, I will walk you through the top trading platforms to help you find the best Canadian crypto exchange. ​

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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