One of the most important reasons Canadian Bitcoin holders use Bitcoin-backed loans is the tax treatment.
Is a Bitcoin-Backed Loan a Taxable Event in Canada?
No. Borrowing against Bitcoin is not a disposition under the Income Tax Act. You are not selling your Bitcoin — you are pledging it as collateral. No capital gains are triggered when you receive the loan.
When Does a Taxable Event Occur?
Repay normally: No taxable event. You borrowed, repaid, and your Bitcoin position is unchanged.
Liquidation (margin call not met): If DWM Canada liquidates your Bitcoin to repay the loan, this IS a taxable event — treated as a disposition at the liquidation price.
Selling Bitcoin vs Borrowing: The Tax Difference
| Sell $100K Bitcoin | Borrow $50K against Bitcoin | |
| Capital gains triggered? | Yes | No |
| Tax owing (estimate) | $15,000–25,000+ | $0 |
| Bitcoin position retained? | No | Yes |
| Interest cost | None | ~$6,000/yr at 12% |
Building Your Bitcoin Position
If you’re accumulating Bitcoin to eventually use as collateral, 1Bitcoin.ca is Canada’s FINTRAC-registered Bitcoin brokerage — the simplest way to buy Bitcoin in Canada.
Ready to put your Bitcoin to work? Apply for a DWM Canada loan →
This article is informational only and does not constitute tax or legal advice. Consult a qualified Canadian tax professional.
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DWM Canada | Bitcoin Custody & Lending