Can I Buy Crypto in My Wealthsimple TFSA? (How To Guide)

Do you have a TFSA open with Wealthsimple – or maybe you’re thinking about opening one – and you’re wondering if it’s possible to invest your money in crypto within TFSAs?

If so, this article is for you.

In short, you cannot directly buy cryptocurrency within a Wealthsimple TFSA as crypto lacks regulation in Canada. However, you can buy crypto ETFs that will mirror the performance of selected cryptocurrencies, which offers you a regulated way to invest in the crypto market without direct ownership.

In the following section, we’ll dive into why direct crypto purchases aren’t permitted in a Wealthsimple TFSA and guide you through the fully legal and legitimate alternative of buying crypto ETFs.

Can You Open a TFSA within a Wealthsimple Crypto Account?

So Wealthsimple does have a product called Wealthsimple Crypto, which I’ve used and reviewed for years, and it provides Canadians with an intuitive crypto account to trade, hold, and even transfer a range of crypto and digital currencies including Bitcoin, Ethereum, Dogecoin and many other.

So if you wanted to open up a crypto trading account, the Wealthsimple Crypto trading platform would definitely be your best bet to start trading on, as it operates like a true crypto exchange where you can directly buy into popular coins and own the keys to these coins, further allowing you to buy, sell or transfer your holding at the push of a button.

Crypto

Noel’s Take on Wealthsimple Crypto

Wealthsimple Crypto scores a solid 4.5/5 from me – It’s dead simple to use, and they’re constantly improving with new features. Depending on who you ask, their fees can be seen as high, but I feel safe using a regulated Canadian exchange which is why it’s my go-to for buying and managing my crypto.

Try Wealthsimple Crypto

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However, here’s the thing – you can’t open a TFSA on the Wealthsimple Crypto trading platform, you can only do that within a Wealthsimple Trade or Invest Account (see differences here).

Why is that?

Well, TFSAs are what is referred to as registered accounts, which means they’re special types of accounts that come with tax breaks, but this also means they’re heavily regulated by the CRA.

And because crypto is largely unregulated and unprotected in Canada, the CRA doesn’t include it in its list of “permitted investments.” ^[1]

So, bottom line, if you want to directly hold crypto in a TFSA from Wealthsimple or any other TFSA issuer, you’re out of luck as this is not possible.

However, as mentioned earlier, similar to things like buying bonds or gold on Wealthsimple, while you can’t purchase these directly, there’s a workaround: you can invest in an ETF representing the asset, which will reflect its market performance.

Now, in this next section, I’m going to show you exactly how to do this in a step-by-step guide with screenshots.

How to Buy Crypto within a TFSA on Wealthsimple Trade

Okay, so if you want to buy crypto ETFs on the Wealthsimple trade app, you’ll want to first setup an account on Wealthsimple Trade – the entire process only takes about 15 minutes.

For the sake of this example, I’m going buy a Bitcoin ETF called ProShares Bitcoin Strategy ETF (BITO) which is, well obviously, a Bitcoin ETF that “aims to produce returns that correspond to bitcoin”. ^[2]

Another common Bitcoin ETF is Purpose Bitcoin ETF ^[3].

Okay lets get into it.

Step #1 – Login to Your Wealthsimple Trade Account

For the purpose of this article I’m going to use the desktop version, but the mobile version is essentially the exact same.

Once you have your account open, you’ll want to login which will bring you to the homepage as you see below.

Once you’re on this screen here, you’ll then want to go to the top navigation search bar, which brings us to step #2.

Step #2 – Use The Search Bar To Look For the Crypto ETF You Want to Buy

Now in the search bar in the top navigation menu, search the Crypto ETF you want to buy, if you’re not sure exactly what you want to either buy or sell crypto in, do some research and find one that suites your preferences and then search for it on Wealthsimple to see if they offer it.

As mentioned earlier, I am buying ProShares Bitcoin ETF (BITO), so I’ll search for that and then select it once I see it in the drop down.

Step #3 – Select The Number Of Shares You Want To Purchase and Click Buy

As you can see from the image below I’m now on the trading page, and the price per share of a BITO ETF is 13.17, and I’m going to hypothetically buy 10 shares of it, coming to a total dollar value of $131.70.

Now I’ll click buy which will bring us to the confirmation page.

Note: Above you’ll also see “Order Type” because Wealthsimple Trade also gives retail investors with the option for a market buy, fractional buy, limit buy, and a stop-limit buy – so choose the best option based on your investment strategy.

To learn more about each order type, you can check out Wealthsimpe’s help center article here.

Step #4 – Look Over the Purchase Details And Confirm the Order

Now review your investment details, and if you’re satisfied, click “Confirm order.”

For the sake of this article’s demonstration, I am just buying $1 worth of this ETF through a fractional buy order type.

The reason there are no commission fees (trading fees) or currency conversion fees for this order is that Wealthsimple Trade doesn’t charge commission fees on any of its trades, but also because I’m on the Wealthsimple Trade Plus plan, which gives me a USD account, resulting in no foreign exchange fees associated with my trade as I’m trading in US dollars.

If you want a more in-depth breakdown of the trading fees and how Wealthsimple calculates this conversion cost, see my article Wealthsimple Trade Fees | Simple Breakdown With Examples

Step #5 – Click Done

And that’s it, now select Done or View Order Status.

It can sometime take a few seconds or even minutes from when you confirm your order until it’s officially filled – but once it is, you’ll get a confirmation email to the address you have your Wealthsimple account setup with.

If you’ve followed along and completed your order, well then congrats, you now have your money invested in crypto within a Tax Free Savings Account.

Don’t yet have a TFSA setup yet on Wealthsimple Trade?

Here’s my take.

Trade

Noel’s Take on Wealthsimple Trade

Due to its low costs, diverse investment options and overall ease of use, I think Wealthsimple Trade is Canada’s best self-directed online brokerage platform, and I would give it a score of 4.5/5.

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Summary

So now you should know that the current landscape doesn’t allow for direct cryptocurrency investments within a Wealthsimple TFSA (or from any TFSA issuer) – But for those looking to include this emerging asset class in their financial strategy, there’s definitely a workaround.

On the other hand, Wealthsimple’s Crypto trading platform has garnered attention as a prominent crypto exchange in Canada as the platform enables Canadians to dive deep into the realm of Wealthsimple’s digital assets, like Bitcoin and Ethereum (or other crypto coins), offering both the opportunity to trade, hold and send these digital currencies. It combines the traditional essence of trading with the modern world of cryptocurrencies, making it super user-friendly.

And then for those strictly looking to blend cryptocurrencies with their TFSA, Crypto ETFs come to the rescue. These ETFs mirror the performance of select cryptocurrencies, allowing investors a regulated means to access the crypto market. In essence, while direct crypto investments might be off the table for now, platforms like Wealthsimple ensure enthusiasts aren’t completely left behind.

FAQs about Trading Crypto within a TFSA

Is Holding CryptoCurrency In a TFSA Possible?

Due to the unregulated status and value of cryptocurrency in Canada, you cannot directly hold any crypto assets in your TFSA. However, there’s a legitimate alternative for most Canadians who want crypto exposure in their TFSA, which is to invest in crypto coins through a cryptocurrency ETF, such as ProShares Bitcoin ETF (BITO).

Should You Buy and Sell Crypto In a TFSA?

Whether you should invest in a crypto ETFs or not really depends on your investment goals. Adding crypto ETFs to your TFSA can significantly boost portfolio growth but given the volatile nature of cryptocurrencies, there’s clearly an inherent risk involved in speculative investment – so it’s crucial to proceed with caution and ensure before investing that you’re well-informed about potential market fluctuations.

Can I Buy Ethereum in a TFSA?

No, similar to any other cryptocurrency, you cannot directly buy and store Ethereum^[4] (ETH) in a Tax-Free-Savings-Account (TFSA).

Can the CRA Track Cryptocurrency?

Cryptocurrency, like other asset classes, is subject to taxation when one realizes their crypto profits. In other words, if you convert your cryptocurrency holdings into fiat or make transactions that result in gains, you’re expected to pay taxes based on whether these gains are categorized as business income or capital gains.