A Practical Canadian Guide to Buying Bitcoin Peer-to-Peer and OTC Safely (2025)

Buying Bitcoin outside a traditional exchange can be fast, private, and cost-effective. For Canadians, peer-to-peer and over-the-counter purchases are popular ways to acquire Bitcoin, especially for larger amounts or for people who prefer cash or Interac e-transfer methods. This guide walks through safe, practical steps for P2P and OTC purchases in Canada, covering escrow, identity and compliance considerations, common scams, and recordkeeping for tax compliance. Whether you are a first-time buyer or scaling up your holdings, these tips will help you reduce counterparty risk and protect your crypto.

Why P2P and OTC are Popular in Canada

Peer-to-peer (P2P) marketplaces and over-the-counter (OTC) desks serve different needs. P2P platforms let individuals trade directly, often using Interac e-transfer, bank transfer, or cash. OTC desks provide a more formal counterparty for larger trades, often offering better price execution and private settlement. In Canada, bank relationships, Interac usage, and local regulations create a unique environment. P2P and OTC provide alternatives when exchange limits, KYC requirements, or banking friction make direct exchange purchases difficult.

Before You Buy: Safety and Preparation

1. Decide custody and receive address

Always send purchased Bitcoin directly to a wallet you control. For maximum safety, use a hardware wallet and export a receiving address in your device's supported format. Avoid sending large amounts to custodial exchange addresses or software wallets you do not control.

2. Test with a small trade

Before committing to a large OTC or P2P trade, do a small test transaction. This confirms that the counterparty is capable of completing the trade and that your address and payment method work as expected.

3. Know the regulatory and tax basics

Canadian users should be aware of FINTRAC and CRA obligations. OTC desks and some P2P platforms conduct Know Your Customer procedures. Keep records of trade dates, amounts, counterparties, and transaction IDs for tax reporting. Do not rely on verbal agreements alone; get receipts or trade confirmations in writing.

Buying Bitcoin Peer-to-Peer: Step-by-Step Safe Workflow

  1. Choose a reputable P2P platform. Look for platforms with escrow, dispute resolution, strong reviews, and active Canadian listings.
  2. Review seller history. Prioritize sellers with high completion rates and many positive reviews. Avoid accounts created recently with limited activity.
  3. Use escrow whenever possible. Escrow holds the Bitcoin from the seller until you confirm payment. This is the single most effective anti-scam mechanism.
  4. Agree payment terms clearly. Specify payment method (Interac e-transfer, bank transfer, cash), time windows, and confirmation steps in the chat before sending money.
  5. Perform a small test trade. After escrow release and confirmation, scale up to the full amount if everything is correct.
  6. Record the on-chain transaction ID. Verify the Bitcoin arrives at your receiving address and save the TXID as proof of receipt.

Interac e-transfer best practices

  • Never release funds before receiving Bitcoin into your wallet. If the seller asks you to cancel or reverse an Interac transfer as part of the trade, treat this as a red flag.
  • Use Interac Autodeposit when possible to avoid acceptance scams. If Autodeposit is not available, double-check the recipient email or phone number and confirm the payee details with the seller.
  • Keep bank screenshots or receipts for records. They are useful if you need to escalate disputes or document the trade for taxes.

Over-the-Counter (OTC) Trading: What to Expect

OTC desks cater to larger trades and often operate with a higher level of trust and compliance. They may be hosted by regulated firms, brokerages, or independent liquidity providers. Key advantages include price negotiation, lower slippage on large trades, and settlement options like bank wires or CAD settlement through escrowed accounts.

OTC safety checklist

  • Verify the desk's reputation and registration. Reputable OTC desks will often perform KYC and provide corporate details. If a desk refuses to confirm who they are, proceed with caution.
  • Request formal trade confirmations. Ask for signed trade tickets or email confirmations that include amounts, price, settlement method, and timing.
  • Prefer on-chain settlement to custodial settlement where possible. If a desk requires you to use their custody service, understand the custody terms, insurance, and withdrawal timelines.
  • Use bank wire or verified CAD settlement rails to avoid reversible payment methods for large trades.

Escrow, Multisig, and 2-of-3 Solutions

Escrow mitigates counterparty risk. For sophisticated users, consider multisig escrow models. A common approach is a 2-of-3 multisig wallet where buyer, seller, and a neutral arbitrator each hold a key. This model reduces trust required in any single party and makes theft or fraud more difficult.

How multisig escrow works in practice

  1. Buyer and seller agree on terms and create a multisig address with three public keys.
  2. Seller funds the multisig address and notifies the buyer. The funds are visible on-chain and cannot be moved without two signatures.
  3. Buyer completes payment off-chain. On confirmation, buyer and seller sign to release the funds back to the buyer, or the seller collects if buyer fails to pay. If dispute arises, the arbitrator signs with the rightful party.

Setting up multisig requires technical knowledge or a trusted service that supports PSBT and multisig wallets. For most Canadians, escrow provided by established P2P platforms is simpler and still effective.

Common Scams and How to Avoid Them

  • Fake escrow - Scammers create bogus escrow pages or ask you to use a private escrow. Use only the platform's built-in escrow and verify the escrow transaction on-chain when possible.
  • Chargeback abuse - Interac e-transfer is generally irreversible once accepted, but other payment methods can be reversed. Avoid reversible payments for large trades.
  • Impersonation - Scammers impersonate reputable sellers, OTC desks, or platform moderators. Double-check usernames, and be suspicious of off-platform communication.
  • Address swapping - Always verify the receiving address on your own device. Confirm the address matches the hardware wallet screen when possible.
  • Pressure tactics - If someone rushes you to finalize a trade without proper steps, step back. Scammers rely on panic to bypass safety checks.

Never send money first without a trusted escrow. If a trade sounds too good to be true, it probably is.

Recordkeeping and Tax Considerations in Canada

Keep a clear record of every P2P or OTC purchase. The Canada Revenue Agency treats cryptocurrency transactions as either business income or capital gains depending on activity. For each trade, save:

  • Date and time of trade
  • CAD value at time of acquisition
  • Counterparty identity or platform details
  • TXID and receiving address
  • Receipts or email confirmations

OTC desks typically issue trade confirmations and statements. If you are unsure how to report trades, consult a Canadian tax professional experienced with cryptocurrency.

A Practical Sample Workflow for a P2P Interac Trade

  1. Find seller and verify profile. Choose a seller with strong reviews.
  2. Open trade and enable platform escrow. Confirm escrow shows funded on platform when seller deposits Bitcoin.
  3. Send Interac e-transfer to the seller according to agreed terms. Use Autodeposit or double-check recipient details. Keep the receipt.
  4. Seller releases Bitcoin from escrow. Check your wallet for the on-chain transaction and the TXID.
  5. Verify receipt and close trade. Confirm the BTC amount and block confirmations before considering the trade complete.

Final Safety Tips for Canadian Buyers

  • Never reveal your full private keys or seed phrase during a trade.
  • Prefer bank wire or cash for large OTC trades to avoid reversibility risks.
  • Use a hardware wallet and verify receiving addresses on-device to prevent address-swapping malware.
  • Consider splitting large purchases into multiple smaller trades to reduce single-counterparty risk.
  • If meeting in person, choose a public, safe location and bring a witness; avoid sharing unnecessary personal information.

Conclusion

P2P and OTC buying are useful tools for Canadians who want flexible settlement options, privacy, or better pricing for large trades. The core safety principles remain simple: use escrow or reputable OTC desks, always receive Bitcoin to a wallet you control, test trades with small amounts, and keep comprehensive records for tax compliance. With careful preparation and the right practices, you can reduce counterparty risk while acquiring Bitcoin responsibly in Canada or anywhere in the world.

If you are new to self-custody, take time to learn hardware wallet setup and backup best practices before moving large sums. A little patience and planning go a long way to protecting your Bitcoin.