How to Store Crypto Safely in Canada (2025 Guide)

AI summary

This article provides a comprehensive guide to safely storing cryptocurrency in Canada, emphasizing the importance of self-custody and understanding the risks of keeping assets on exchanges. It reviews various wallet types—custodial, software, hardware, and paper—highlighting top options for Canadians in 2025, and offers best practices for security and compliance with Canadian legal and tax requirements. The article also discusses common mistakes, evolving regulations, and the future of crypto storage, recommending a hybrid strategy of using both hot and cold wallets for optimal safety and convenience.

If you’re keeping crypto in Canada, security should be your top priority. As more Canadians invest in cryptocurrencies, we’re witnessing an increase in exchange hacks, bankruptcies, and regulatory changes. Holding digital assets is exciting, but if you can’t access them or someone else controls them, you’re exposed. The phrase “Not your keys, not your coins” holds. When you store crypto yourself, you control the private keys; when you don’t, you’re trusting someone else. In this guide, we’ll explain why safe storage matters in a Canadian context, review wallet types (custodial, non-custodial, software, hardware, cold storage), highlight the best wallet options for Canadians in 2025, walk through security practices, examine the legal/tax side in Canada, and look ahead. Let’s dive in.

Why Safe Crypto Storage Matters

When you keep crypto, you’re dealing with assets that exist only as private keys (or seed phrases). If those keys are lost, stolen, or compromised, your assets are gone. For Canadians, this is especially relevant because:

• Exchanges may fail. A prominent example is QuadrigaCX, which collapsed in 2019, leaving customers locked out.
• Hacks continue to occur globally, and Canada is not immune.
• If you don’t control your private keys, then you don’t have complete control of your assets.
• Longer-term holdings often require higher security than casual trading.
• The Canadian regulatory environment is evolving; therefore, being prepared is a smart move.

Risks of keeping crypto on exchanges

Keeping coins on an exchange (a custodial wallet) is tempting: it’s convenient, and you can trade easily. But there are downsides:

• You don’t hold the private keys: the exchange does. If they mismanage operations, go bankrupt, or hackers breach their systems, you may lose access to your funds.
• Some exchanges may freeze withdrawals or be subject to regulatory action.
• You may face risks of insolvency or fraud.
• In Canada, regulations are becoming stricter, which means custodial services may face new obligations or restrictions.

Private keys and backups

Owning your keys means you are responsible for:

• Generate and store a strong recovery phrase/seed phrase offline.
• Keeping backups in secure, separate locations (fire-proof safe, bank deposit box).
• Protecting against physical loss, theft, or damage (e.g., fire, flood). Misplacing your recovery phrase means you may not be able to access your cryptocurrency again. On the other hand, storing backups online (in the cloud or via email) is also risky.

Bottom line: Secure storage is foundational to safeguarding your crypto in Canada.

Types of Crypto Wallets in Canada

Let’s compare the key wallet types you’ll encounter in Canada (and globally). Each has pros and cons.

1. Custodial Wallets (Exchange Wallets)

These are wallets offered by exchanges such as Bitbuy, NDAX, or Coinbase in Canada.

Pros:

• Convenience: trading, buying, and selling all in one place.
• Recovery options: many services have built-in account recovery.
• Suitable for short-term or active trading.

Cons:

• You don’t control private keys. If the exchange shuts down, you may lose access.
• Third-party risk is higher.
• Less ideal for long-term storage of extensive holdings.

2. Software Wallets (Hot Wallets)

These are non-custodial apps or browser extensions that you install, such as Trust Wallet or MetaMask.

Pros:

• You hold your private keys.
• Accessible for frequent transactions, interacting with DeFi/NFTs.
• Easy setup and transfer.

Cons:

• Because they are online (connected to the internet), they are vulnerable to malware, phishing, and hacks.
• You must protect your device, software, and recovery phrase carefully.
• For significant or long-term holdings, this may still be too exposed.

3. Hardware Wallets (Cold Storage)

Devices that store your private keys offline. Examples include physical wallets that are never (or rarely) connected to the internet.

Pros:

• Highly secure: offline = significantly reduced attack surface.
• Ideal for large amounts or long-term holdings.
• Gives you self-custody (you control everything).

Cons:

• You’ll need to put in a bit more effort by setting up and managing backups and physical security yourself.
• Cost: You must purchase a hardware device.
• Not as convenient for frequent trading.

4. Paper & Air-Gapped Wallets

These involve generating keys offline (on a computer not connected to the internet) and storing them on paper or offline devices.

Pros:

• Maximum isolation from online threats.
• Useful for very long-term holdings or “cold vaults”.

Cons:

• Physical risks: loss, damage, fire, theft.
• Less convenient to spend or trade holdings quickly.
• More technical to set up safely.

Best Crypto Wallets in Canada (2025)

Here are wallet options that make sense for Canadians in 2025, covering both hardware and software, as well as custodial and non-custodial options.

1. Tangem Wallet – Best Hardware Wallet for Everyday Use

The Tangem Wallet is card-shaped, uses NFC technology, and is designed for ease of use while maintaining robust security. It supports thousands of cryptocurrencies and claims that no seed phrase backup is required. For Canadians: simple, beginner-friendly cold storage for the majority of your holdings.

2. Ledger Nano X – Advanced Hardware Wallet

This device from Ledger supports over 5,000 coins, features Bluetooth and mobile connectivity, and stores private keys offline.

3. Trezor Model T – Open-Source & Premium Hardware Wallet

From Trezor, open-source firmware, colour touchscreen, strong security, and broad coin support.

4. Software Wallets: Trust Wallet & MetaMask

These non-custodial software wallets let you self-custody and engage in DeFi/NFTs. Trust Wallet is mobile-first with multi-chain support. Koinly MetaMask is strong for desktop/browser use and integrates with hardware devices. Appropriate for smaller amounts, active trading, or DeFi. However, you still need to secure your device and keys for self-custody.

5. Custodial Alternative: Coinbase Wallet

If you prefer a custodial route that still gives optional self-custody, Coinbase Wallet (linked to the exchange) offers convenience and familiarity. For Canadians, it’s a starting point if you’re new and maybe transitioning to self-custody later.

How to Secure Your Crypto Wallet

Keeping a wallet is one thing; securing it properly is another. Here are the best practices tailored for Canada.

• Enable 2FA (two-factor authentication) on any account that supports it (especially exchanges and custodial wallets).
• Use strong, unique passwords for every service. Avoid reuse.
• Store recovery phrases offline, never copy them into cloud storage, email, screenshots, or photos.
• Keep hardware wallet devices in a safe, dry, fire-resistant location (preferably locked away).
• Update the firmware/software of wallets regularly—vendors often patch vulnerabilities.
• Be vigilant for phishing attempts. Always verify website URLs, check browser extensions, and avoid clicking on suspicious links.
• When using public WiFi or shared networks, use a VPN or avoid key operations entirely.
• For hardware wallets: buy directly from the manufacturer, never from second-hand sources (risk of tampered device).
• Consider multi-signature options or dedicating a “vault” wallet for high-value holdings.

Cold Storage vs Hot Wallets – What’s Better?

Key difference: cold storage = offline, providing maximum security; hot wallets = online, offering maximum convenience.

• Cold storage (hardware devices, paper wallets) is best for long-term holdings or large amounts.
• Hot wallets (such as software, mobile apps, and custodial accounts) are convenient for making frequent transactions or handling smaller amounts.
• Ideally, adopt a hybrid strategy — keep daily or small amounts of crypto in hot wallets for flexibility, and store the bulk of your holdings in cold storage (using Tangem hardware wallet) for added security.

Legal and Tax Aspects of Crypto Wallets in Canada

Storing crypto in wallets is legal in Canada—there’s no blanket ban. But key points for Canadians:

• The Canada Revenue Agency (CRA) treats crypto transactions as either business income or capital gains, depending on your activity.
• You must track every transaction, including the date, value in CAD, cost base, proceeds, and other relevant details. Being in self-custody doesn’t exempt you.
• Holding crypto in a wallet (custodial or self-custody) is fine, but you must report trades, sells, swaps, and dispositions.
• Using self-custody (owning private keys) can simplify things: you’re less dependent on third-party reporting.
• If you use an exchange (custodial), ensure you keep exported statements and data, as exchanges may be required to report to the CRA.
• If you lose access to your wallet (due to lost keys), you may still need to report the loss or write it off; keep detailed records of the incident.
• In the future, anticipate more guidance from CRA (e.g., wallet-specific disclosures) and potential regulatory updates for digital asset holders. Check out our crypto taxes guide in Canada.

Common Mistakes When Storing Crypto

Avoid these pitfalls before they cost you big.

• Losing your private keys or recovery phrase because you didn’t back them up securely.
• Keeping all your assets on an exchange rather than distributing them across multiple exchanges helps mitigate risk.
• Downloading and using unverified wallet apps or browser extensions poses a real threat from malicious code.
• Failing to update firmware/software on wallets (hardware wallets sometimes get security patches).
• Neglecting physical security: e.g., storing the seed phrase in a place that could burn down, or relying on a single backup in one location.
• Not using multi-signature (if available) for high-value holdings.
• Overlooking the importance of verifying device authenticity (especially for hardware wallets).
• Assuming “cold” means no risk—physical theft or damage remains.
• Ignoring the regulatory/tax side (thinking “I just hold it and forget it”).
• Using hot wallets for high amounts and leaving them connected to the internet for extended periods

Future of Crypto Storage in Canada

Looking ahead, the crypto storage space is evolving.

• Hardware wallets are advancing, with features such as seedless recovery, biometric authentication, and wearable devices.
• Canada may see more detailed regulatory guidance, such as letting data reporting, self-custody disclosures, or standardized compliance requirements.
• As central bank digital currencies (CBDCs) become more likely, wallet infrastructure may include integration with new digital-cash platforms in Canada.
• Institutional custody (insured storage services) is likely to become standard soon, providing Canadians with options beyond personal wallets.
• Self-custody education will become more prevalent, with universities, financial advisors, and tax professionals incorporating crypto wallet safety into their offerings.
• Hybrid wallet models: hardware and software integration, multi-sig vaults, innovative contract-based cold storage solutions tailored for Canadian users.

FAQ – How to Store Crypto in Canada

What is the safest crypto wallet in Canada?

The “safest” wallet depends on how you use it. In general, Tangem self-custody hardware wallets kept offline are the most secure option for significant or long-term holdings.

How do I store Bitcoin securely in Canada?

To store Bitcoin securely in Canada, consider using the Tangem Wallet. You simply tap the card to your phone via NFC, set an access code, and manage your Bitcoin through the Tangem app. No seed phrase is stored online, and your keys never leave the card. Discover how to store Bitcoin securely with Tangem.

Is it safe to keep crypto on exchanges in Canada?

It is possible, but it comes with greater risk. Exchanges are custodial: you don’t control the private keys. Use only what you need on an exchange, and transfer the rest to your Tangem wallet.

Are hardware wallets legal in Canada?

Yes. There’s no prohibition on owning a hardware wallet or storing crypto in Canada. What matters is reporting transactions correctly to the CRA.

Do you pay tax on crypto held in a wallet?

You don’t pay tax simply for holding cryptocurrency, but you must report when you dispose of it (i.e., sell, trade, convert, or spend). Capital gains or business income may apply depending on your situation.

What happens if I lose my hardware wallet?

If you still have at least one remaining card or ring from your set, you retain access to your funds and can continue using it. If you lost all devices but did set up a seed phrase (available on second-generation Tangem wallets and the Tangem Ring), you can restore the wallet on a new device using the seed phrase. For step-by-step guidance, read our article on 'I Lost My Tangem Card, Ring, & Smartphone.' What Happens Next?