Canadians: Is Coinbase a Legitimate Crypto Exchange?
Purchasing cryptocurrency can be easily done by using a cryptocurrency exchange. These platforms support a wide range of coins, providing you with a convenient way to manage your digital assets in one place. However, with numerous exchanges available, it can be challenging to determine which one suits your needs.
In this comprehensive review, we will closely examine Coinbase, one of the most renowned cryptocurrency exchanges worldwide. We will explore its essential features, pricing for users in Canada, as well as its advantages and disadvantages. By the end, you will have a clear understanding of whether Coinbase is the right choice for Canadians, and we will also suggest a few alternatives.
An Introduction to Coinbase
Coinbase stands as the largest cryptocurrency exchange in the United States in terms of trade volume. Established in 2012 in San Francisco, the company no longer maintains a central headquarters, with its employees working remotely. Although available in over 100 countries, including Canada, there are certain limitations depending on your location. It is crucial to understand these restrictions if you reside in Canada.
Using Coinbase in Canada
To become a member of Coinbase, you must fulfill the following requirements:
- Be at least 18 years old
- Provide a government-issued photo ID
- Possess a computer or smartphone with an internet connection
- Have an active phone number to receive text messages
- Ensure that your browser is up-to-date (Coinbase recommends using Chrome)
If you meet the criteria mentioned above, opening a Coinbase account is a straightforward process. Follow the steps below to create a new account:
Coinbase allows you to buy and sell more than 100 different cryptocurrencies, including the following popular coins:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Ethereum (ETH)
- USD Coin (USDC)
- Uniswap (UNI)
- Stellar Lumens (XLM)
- Aave (AAVE)
- Litecoin (LTC)
- Cardano (ADA)
- Wrapped Bitcoin (WBTC)
- Internet Computer (ICP)
- Maker (MKR)
- Cosmos (ATOM)
- Polygon (MATIC)
- Tether (USDT)
Purchasing Cryptocurrency on Coinbase
Purchasing and selling cryptocurrency with Coinbase is remarkably straightforward. Below are the step-by-step instructions for buying Bitcoin using the desktop app. (You can also trade on Coinbase's mobile app).
Coinbase pricing may not be the strongest aspect of this cryptocurrency exchange, particularly for Canadian users.
For Canadians, the fee to purchase cryptocurrency using a debit card (the only available option) is notably high at 3.99%. This fee is considerably greater than what other crypto exchanges offer. Furthermore, in addition to the purchase fee, you will incur a spread cost of approximately 0.50% when buying and selling. This spread cost also surpasses the average fee charged by leading Canadian crypto exchanges.
While you can access reduced pricing through Coinbase Pro, it is not possible to utilize Canadian fiat currency on the platform. As a result, this feature holds little value for most Canadian traders.
In addition to its crypto trading platform, Coinbase offers various other products. Although not all of them are accessible to Canadian customers, a few significant ones are available. Let's take a closer look at their key products and services.
Coinbase Learning Rewards
Canadian users have access to Coinbase Learning Rewards. By completing educational tutorials designed to teach you about different types of cryptocurrency, you can earn crypto. These video courses can be accessed directly from your crypto account.
Upon watching the videos, you will need to complete a short quiz to demonstrate your comprehension of the material. For each completed quiz, you will receive crypto rewards in your Coinbase account.
At the time of writing this post, the following crypto rewards were available: GPH ($4), AMP ($3), SHPING ($15), NEAR ($3), and ACS ($3).
Crypto Earn offers two ways to earn rewards on your cryptocurrency: Staking and Defi Yield. According to Coinbase, you can earn up to 6.00% APY on your crypto.
To participate, all you need to do is own the specific asset (coin) you want to stake and opt in by clicking a few buttons in your Coinbase account. If you are unfamiliar with staking and Defi yield and how they work, here is a basic explanation:
What Is Staking?
Staking is a means of verifying and securing transactions on blockchains that rely on a proof-of-stake model. Proof of stake is more energy-efficient compared to other blockchain methods like proof of work. When you stake your crypto, you delegate a specific amount and, in return, receive rewards from Coinbase. While your crypto is being staked, it cannot be traded. Staking is akin to a high-interest savings account for your crypto assets, albeit without a principal guarantee.
What Is Defi Yield?
With Defi yield, you lend your crypto assets to a third party to earn rewards, while also assisting in securing the blockchain. By selecting Defi yield through Coinbase, all the intricate details of the process are handled, making it more convenient for investors.
Coinbase Credit Card (not available in Canada)
Coinbase offers its own Visa Debit card, known as Coinbase Card. This card allows for easy spending of both cash and crypto, while also offering crypto rewards for every purchase made. Unfortunately, Canadian users are currently unable to access this card.
Coinbase Advantages and Disadvantages
Coinbase is a highly popular crypto platform in the United States, but can it meet the needs of Canadian users? Below is a list of advantages and disadvantages:
- Available in Canada
- Supports over 100 different coins
- Offers educational tools that provide rewards
- Participate in staking and Defi yield to earn rewards.
- High fees are associated with using Coinbase.
- The only funding option available is through a debit card.
- Unfortunately, Coinbase Card is not available in Canada.
- It is not possible to transfer funds to a Canadian bank account.
Earn Rewards with Staking and Defi Yield
Coinbase and Canadian Bank Accounts
For Canadians interested in opening a Coinbase account, it is important to note that directly selling crypto and transferring funds to a bank account is not possible. Instead, the only option available is to transfer funds to a PayPal account and then proceed with a bank account transfer. This process is not extremely inconvenient, but it is less straightforward compared to the options provided by Canadian cryptocurrency exchanges like Bitbuy and Coinsmart. It should be mentioned that Coinbase does not make this detail very clear on its website.
Alternative Options to Coinbase
Using Coinbase in Canada comes with several drawbacks, such as high fees and the inability to link your bank account to the platform. However, Canadian crypto traders have other viable alternatives to consider. Here are three reliable options:
Bitbuy is a cryptocurrency exchange based in Canada that offers a transparent and competitive pricing structure, as well as an exceptional trading platform. Trading fees range from 0.10% to 0.20%, making it a more affordable option compared to Coinbase.
Beginners will find Bitbuy's Express Trade platform convenient, while experienced traders can take advantage of the advanced Pro Trade platform. Trading is also available on the go through Bitbuy's mobile app for iOS and Android devices.
As a Canadian crypto exchange, Bitbuy is registered with FINTRAC and prioritizes security through 2-step authentication and 95% cold storage. Users can trade over 25 different cryptocurrencies on Bitbuy.
Similar to Bitbuy, Coinsmart is a well-established Canadian cryptocurrency exchange that supports 16 different coins. Unlike Coinbase in Canada, Coinsmart allows users to fund their accounts through various methods, including Interac e-Transfer, wire transfer, or credit/debit cards. The trading fees on Coinsmart are competitive at 0.20%.
In addition to being Canada's largest robo-advisor, Wealthsimple also facilitates cryptocurrency trading. Initially, only Bitcoin and Ethereum were available, but now more than 50 coins are supported. Users can easily stake Ethereum and Solana and earn up to 4.5% APY with just a few clicks.
While there are no fees for deposits and withdrawals on Wealthsimple, the trading fees range from 1.5% to 2%, which is higher compared to many competitors. Additionally, users can only transfer fiat currency in and out of their accounts, not crypto. Funding options for Wealthsimple include e-Transfer and wire transfer.
Wealthsimple Crypto may not cater to advanced traders who require extensive functionality, but it serves as an excellent starting point for beginner traders.
Reviewing Coinbase in Canada: Final Thoughts
Coinbase is a globally recognized crypto platform that is popular in the US. However, it falls short for Canadian users due to various limitations. The inability to link a Canadian bank account is a major drawback, forcing users to withdraw funds to PayPal before transferring to their bank accounts. Additionally, a 3.99% fee is applied when funding an account with a debit card, even before any cryptocurrency purchases are made.
One positive aspect of Coinbase is the ability to earn rewards by watching educational videos and engaging in staking and Defi yield through Coinbase Earn. However, Canadian exchanges offer staking with lower fees and more funding options.
In conclusion, if your goal is to trade cryptocurrency, it is advisable to bypass Coinbase and choose a reputable Canadian crypto exchange such as Bitbuy, Coinsmart, or Wealthsimple Crypto.
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