Why Sell Bitcoin Peer-to-Peer?

P2P selling offers benefits that attract many Canadians and global users alike:

• Better rates than some exchanges when demand is high locally.
• Faster settlement for cash or direct bank-based payments.
• Greater privacy compared with custodial platforms that hold your funds.
• Ability to work around temporary bank verification or deposit delays on exchanges.

Know the Risks: Common Scams and Failure Modes

Before you sell, understand the main risks so you can guard against them.

• Interac e-transfer scams where buyers fake a deposit notification, reverse the transfer, or exploit bank holds.
• Chargebacks and disputes on payment rails that allow reversals after you release Bitcoin.
• Fake escrow or middleman scams where scammers impersonate trusted services or admins.
• Double-spend or Replace-By-Fee attacks on low-fee unconfirmed transactions.
• Physical safety risks when meeting in person for cash trades.
• Legal and tax exposure from not reporting disposals to the Canada Revenue Agency (CRA) or triggering FINTRAC reporting thresholds.

Four Safe P2P Sale Workflows

Below are step-by-step workflows for common P2P sale methods. Use one consistent approach and never mix practices across methods in a single trade.

1) Interac e-transfer Sales (Bank Transfer)

Interac e-transfer is widely used in Canada but has several pitfalls. Follow these steps:

1. Agree on price, account names, and a clear procedure in writing (chat or email). Keep records.
2. Ask the buyer to send the e-transfer to your bank account and provide the exact reference number.
3. Do not release Bitcoin based on a confirmation text or email alone. Log in to your bank account and verify the transfer is present and settled in your balance.
4. If your bank shows a pending hold or a fraud review, wait until funds are fully cleared in the account. Some banks may place a hold or reverse transfers if flagged.
5. Preferably, use an escrow agent or a multisig escrow setup if the trade size is large. For smaller trades, only release coins after funds are settled.
6. Always sign and broadcast the Bitcoin transaction from a hardware wallet. Consider creating a PSBT on an offline signer and verifying the outputs before broadcasting.

2) Cash-in-Person Sales

Cash trades remove payment reversals but increase personal safety risk. Use this flow:

1. Choose a public, well-lit meeting spot with surveillance, such as a bank lobby or busy café. Bring a friend and tell someone where you will be.
2. Agree on the amount and confirm the exact fiat bill denominations and their authenticity before the meeting.
3. Use a watch-only wallet or a prepared unsigned transaction to avoid exposure of your private keys. One safe pattern is to create the unsigned transaction in advance with the buyer's receiving address, then sign on your hardware wallet once you confirm cash in hand.
4. Count the cash slowly and, when satisfied, sign and broadcast. If you use a PSBT workflow, hand the signed transaction to the buyer to broadcast themselves as proof the coins are transferred.
5. Never broadcast before you verify cash is in hand and genuine. If threatened, prioritize personal safety over the trade.

3) Escrow-Based P2P Platforms and Local OTC Desks

Using an escrow service reduces counterparty risk if the platform is reputable. Still follow strong controls:

1. Use platforms with a good reputation in Canada and read how escrow disputes are resolved.
2. Confirm escrow uses multi-signature or held-funds processes that you can verify on-chain.
3. Create the trade, deposit coins to the escrow address, and wait for buyer payment as confirmed by the platform.
4. Do not release coins to a buyer-controlled address until the platform marks payment verified and completed. Keep screenshots and transaction IDs.
5. Withdraw remaining funds to your cold storage after completion. Avoid keeping coins on escrow longer than necessary.

4) Bank Wire or EFT to Business Accounts (Larger Trades)

For larger OTC trades where both parties are known and institutional, a wire may be preferable.

1. Use signed contracts and identity verification for counterparty risk management. Consider escrow or escrow-like trust arrangements with lawyer or accountant involvement.
2. Wait for a final settled wire to arrive in your account before releasing coins. Banks may still have compliance checks that delay settlement.
3. Keep a paper trail for tax reporting and regulatory reasons. Large transfers may require FINTRAC-related reporting in Canada.

Technical Protections: Wallets, PSBT, and Watch-Only Monitoring

Don’t rely on trust. Use tools that let you verify payment flows without exposing keys.

• Hardware wallets: Always sign P2P transactions with a verified hardware device. Never enter your seed into a phone or PC to complete a trade.
• Watch-only wallets: Share a watch-only invoice or address with buyers so they can verify on-chain status without knowing your keys. This reduces risk of address tampering.
• Partially Signed Bitcoin Transactions (PSBT): Use PSBT workflows for offline signing. The buyer or escrow can prepare the transaction, you sign offline, then the transaction is broadcast.
• Confirm outputs: Always verify destination addresses and amounts on the hardware wallet screen before signing. Visual verification is the single most effective defense against malware.
• Transaction fees and confirmations: For large transactions, wait for sufficient confirmations. Agree with the buyer on how many confirmations constitute finality.

Common Scams and How to Spot Them

Stay alert for these typical ploys.

• Phony bank screenshots or fake Interac emails. Always verify in your own banking app.
• Overpayment scams where buyer sends extra then asks for a refund outside the platform.
• Chargeback laundering where a payment is reversed after you release coins.
• Fake escrow admins contacting you privately. Only use platform UIs and verified channels.
• Impersonation of law enforcement or banks demanding you release coins to resolve an issue. Verify through official channels and get legal advice if necessary.

Taxes, Reporting, and Canadian Regulatory Notes

Selling Bitcoin is a disposition for tax purposes in Canada. Be prepared:

• Report gains or losses from disposals to the CRA. Keep records: dates, amounts, counterparty IDs, and transaction IDs.
• Large or suspicious cash transactions may trigger reporting or FINTRAC inquiries. Be transparent with professional advisors for trades above thresholds that could attract scrutiny.
• Banks may close accounts or freeze transfers if they detect repeated crypto activity they deem risky. Keep documentation showing lawful activity to resolve disputes.
• If you use a Canadian exchange such as Bitbuy or Coinsquare for partial settlement, be mindful of their KYC and Proof-of-Source requirements.

A Practical Pre-Trade Checklist

Use this checklist before starting any P2P sale.

• Confirm buyer identity or platform reputation and keep chat logs.
• Decide on payment method and wait for final settlement before releasing coins.
• Prepare a watch-only address or PSBT and verify outputs on your hardware wallet screen.
• Have an escrow plan for large trades and a fallback dispute resolution plan.
• Ensure you have internet access, a charged hardware wallet, and access to your bank account to verify settlement.
• Document every step: receipts, screenshots of bank confirmation, signed PSBT files, and the final transaction ID.

Real-World Example: A Small Interac P2P Sale Workflow

Example steps for a CAD 500 sale via Interac e-transfer:

1. Agree price and terms in chat. Buyer sends an e-transfer and tells you the transfer reference.
2. Log into your bank and verify the CAD 500 is in your available balance, not pending.
3. Create a PSBT sending the agreed BTC amount to the buyer's address and check the fee is adequate.
4. Sign the PSBT on your hardware wallet after visual verification of address and amount.
5. Broadcast the signed transaction and provide the transaction ID to the buyer and a screenshot for your records.
6. Archive the chat, transaction ID, and bank confirmation for tax and dispute purposes.

Conclusion

Selling Bitcoin peer-to-peer in Canada can be efficient and cost-effective when done carefully. The two pillars of safe P2P trades are verification and documentation. Verify payments in your own banking channel and verify Bitcoin outputs on your hardware wallet before signing. Keep crisp records for regulatory and tax purposes. For large trades, use reputable escrow or multisignature arrangements and consult legal or tax counsel where appropriate. With the right processes and tools, P2P sales can be a secure part of a Canadian Bitcoin user’s toolkit.

Safety tip: If something about a trade feels off, pause. Walk away, verify again, or escalate to a trusted escrow or legal advisor. Your coins and your personal safety are worth more than a single trade.