Recently, individuals have become more interested in investing
in digital assets such as cryptocurrencies (Bitcoin, Ethereum,
Dash etc.); cryptocurrency liquidity mining and yield farming;
and non-fungible tokens (NFTs). The next question often
asked is whether such items can be held in tax-advantaged
accounts such as an RRSP.

An RRSP’s tax-preferred treatment only
extends to “qualified investments.”
Broadly speaking, qualified investments
only include money and securities that
are listed on a designated stock
exchange. As such, digital assets like
cryptocurrencies and NFTs are not
qualified investments, so they cannot
be held in an RRSP.

However, the investment market has seen a recent surge in
cryptocurrency-based exchange-traded funds (ETFs). Many
of these are traded on designated stock exchanges, so
these cryptocurrency ETFs may be qualified investments. A September 20, 2021 Walletbliss article (Best Crypto ETFs in Canada (2021): Cryptocurrency For All, Simon Ikuseru) lists
Canadian Bitcoin and Ethereum ETFs noted as being eligible RRSP and TFSA investments.

Caution must be afforded as a penalty tax applies if the RRSP
acquires a non-qualified investment, with the penalty tax
equal to 50% of the fair market value of that investment. In addition, the RRSP is taxable on any income from the non-qualified investment and on any capital gain (not the normal 50% taxable capital gain) from disposing of the non-qualified investment.

If interested in holding digital assets in a
tax-sheltered savings account such as an RRSP, make
sure that item is a qualified investment.

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