This page is about cryptocurrencies, which are not issued or governed by a government or central bank.

Digital currency is electronic money. It's not available as bills or coins.

Cryptocurrencies are a type of digital currency created using computer algorithms. The most popular cryptocurrency is Bitcoin.

No single organization, such as a central bank, creates digital currencies. Digital currencies are based on a decentralized, peer-to-peer (P2P) network. The “peers” in this network are the people that take part in digital currency transactions, and their computers make up the network.

Using digital currencies

You can use digital currencies to buy goods and services on the Internet and in stores that accept digital currencies. You may also buy and sell digital currency on open exchanges, called digital currency or cryptocurrency exchanges. An open exchange is similar to a stock market.

To use digital currencies, you need to create a digital currency wallet to store and transfer digital currencies. You can store your wallet yourself or have a wallet provider manage your digital currency for you.

You need a “public key” and a “private key” to use your wallet. Keys are made up of a random sequence of numbers and letters.

Public keys are used to identify your wallet.

Private keys are used to unlock your wallet and access your money. Private keys should be kept secret.

All transactions are recorded to a public ledger or “blockchain” that everyone can see.

Digital currencies are not a legal tender

Digital currencies, such as Bitcoin or other cryptocurrencies, are not legal tender in Canada. Only the Canadian dollar is considered official currency in Canada.

The Currency Act defines legal tender.

Legal tender is defined as:

bank notes issued by the Bank of Canada under the Bank of Canada Act

coins issued under the Royal Canadian Mint Act

Digital currencies are not supported by any government or central authority, such as the Bank of Canada.

Financial institutions, such as banks or credit unions, don't manage or oversee digital currency.

Automated exchangers (Bitcoin ATM s)

Automated exchangers are commonly referred to as Bitcoin ATM s. They are vending machines that allow you to insert cash in exchange for bitcoins, and in some cases bitcoins for cash.

Unlike traditional ATMs, they are not connected to your bank, credit union or the Interac network. You may be charged a transaction fee for using a Bitcoin ATM. Shop around as exchange fees vary and you may be able to get lower rates elsewhere.

Generally, when you use a Bitcoin ATM, the machine:

reads the bills you insert

converts the amount into an amount of bitcoins

sends the equivalent of bitcoins to the Bitcoin address you enter

How tax rules apply to digital currency

Tax rules apply to digital currency transactions, including those made with cryptocurrencies. Using digital currency does not exempt consumers from Canadian tax obligations.

This means digital currencies are subject to the Income Tax Act.

Buying goods or services using digital currency

Goods purchased using digital currency must be included in the seller’s income for tax purposes. GST / HST also applies on the fair market value of any goods or services you buy using digital currency.

Buying and selling digital currency like a commodity

When you file your taxes you must report any gains or losses from selling or buying digital currencies.

Digital currencies are considered a commodity and are subject to the barter rules of the Income Tax Act. Not reporting income from such transactions is illegal.

Learn more about the Canada Revenue Agency’s reporting requirements for digital currencies.​