What is NDAX?

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robertstevens

Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.

NDAX, short for National Digital Asset Exchange Inc., is a Canadian cryptocurrency exchange. Created in 2017, NDAX lets you buy, sell and hold the top cryptocurrencies on the market. It offers 17 coins, including Bitcoin, Ethereum, and Dogecoin, plus stablecoins like USDT and a handful of top decentralized finance (DeFi) coins. For its services, it charges low trading fees but high withdrawals fees.

NDAX is one of a handful of bespoke Canadian cryptocurrency exchanges and brokerages. They all serve the Canadian market, are integrated with the Canadian banking system (and Canadian dollar), and are regulated by FINTRAC. However, since cryptocurrency exchanges and brokerages operate entirely online, they compete with international giants like Binance, Coinbase and Huobi, which often offer lower fees and a wider range of services.

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NDAX shares its main advantage over international exchanges with other local exchanges: it’s embedded within the national banking system. NDAX allows for quick deposits from Canadian banks and credit unions, and pairs most markets in Canadian dollars. Deposits of Canadian dollars and US dollars are stored with a Crown-owned Canadian bank rather than being sent offshore, and 95% of crypto assets are stored in offline cryptocurrency wallets.

But NDAX differs from a couple of other popular Canadian crypto brokerages, Newton and Shakepay. On those, you buy and sell straight from the brokerage itself; Newton and Shakepay don’t charge you trading fees but will buy your crypto for slightly below the market rate or sell it to you at slightly above the going rate. NDAX, by contrast, is a cryptocurrency exchange, meaning that you trade with other customers at prices they set. It is comparable to international exchanges like Coinbase Pro or Binance, and on the surface, they look very similar: a large list of markets fills the left of the screen, huge price charts dominate the center of the screen and an order book appears on the right.

One major difference is that on, say, Binance, you can trade Bitcoin for dozens of different coins, including fiat currencies (normal money) and cryptocurrencies. It’s the same for most coins. This isn’t the case on NDAX; you can usually only trade a cryptocurrency for the Canadian dollar, occasionally a stablecoin (a cryptocurrency pegged to the value of something else, like the US dollar), or, even rarer, Bitcoin.

While trading cryptocurrencies for stablecoins is the most popular trade on most exchanges, it is unusual for an exchange to only offer trades for the national currency. Although this reduces your options, one benefit of limiting markets like this is that you don’t have to think about exchange rates between volatile cryptocurrencies. Indeed, NDAX is one of the few exchanges to price everything in the Canadian dollar; usually, things are priced in the world’s de facto reserve currency, the US dollar.

How do you buy Bitcoin on NDAX?

To buy Bitcoin on NDAX, you’ll first have to set up an account. According to its user agreement, you’ll need to be Canadian, although NDAX may open accounts for residents in other jurisdictions “on an exceptional basis” at “its sole and unfettered discretion.” Because of Canada’s strict money laundering requirements, you’ll have to provide a lot of personal information, including your name and address, which NDAX retains for seven years.

Next, you’ll have to deposit “fiat funds,” or Canadian dollars, to your account, using e-transfers, bank drafts, or wire transfers. You can also deposit cryptocurrencies. All deposits on NDAX are free, although banks might charge you for wire transfers and cryptocurrency networks make you pay a fee.

With your account loaded up with funds, head over to the “markets’’ page. Select the pairing of your choice and the type of trade you’d like to execute.

The most basic trade is to trade at the market price, but you can also place more complicated trades. These include limit and stop orders, which let you buy Bitcoin when it has reached your desired price; fill or kill orders, which will execute a trade immediately but only if the order book manages to fill the entire order, or reserve orders, which split large trades into multiple limit orders.

Remember that Bitcoins are highly divisible, even more so than Canadian dollars; you can buy a fraction of a Bitcoin rather than buying an entire coin. Buying and selling crypto on NDAX costs 0.2% per trade.

Once you’ve bought your Bitcoin, it’s in your wallet and you can do with it whatever you please: You can hold it on NDAX, trade it for other coins, cash it out for Canadian dollars, or move it to an external wallet. Withdrawing your Bitcoin costs money, however. See the next section for a comprehensive discussion of withdrawal fees.

In July, 2021, NDAX launched a crypto portfolio tracking system called NDAX Portfolio. You can track your crypto investments on NDAX and view insights about your portfolio’s performance. You can also buy and sell crypto straight from the dashboard and set up recurring purchases. This service, also known as dollar-cost averaging, aims to protect your investment against volatility by buying at regular intervals. However, NDAX Portfolio only shows your portfolio on NDAX, meaning that you won’t be able to view the performance of your coins held on other exchanges. Other services, like Blockfolio, CoinTracking, and CoinTracker, let you collate data from lots of different exchanges and wallets.

What are the fees on NDAX?

NDAX charges a flat fee of 0.2% for buying and selling cryptocurrency. This fee does not change according to the size of your order. It’s higher than some exchanges, like Binance, whose fees start at 0.1% and reduce if you hold its coin, invite friends, or trade a lot per month.

It doesn’t cost any money to deposit funds on NDAX. Deposits of Canadian dollars through Interact e-Transfers take about 3 minutes, and wire transfers and bank drafts take up to a business day (and are subject to bank business hours). Deposits of cryptocurrencies are also free but can take a couple of hours.

However, withdrawals of Canadian dollars and cryptocurrencies are pricey. For withdrawals of Canadian dollars, NDAX charges $25, whether that’s through direct bank withdrawals or wire transfers. This fee is always the same, even if you’re withdrawing less than $25. This is infinitely higher than local competitors like Shakepay and Newton, which do not charge anything for withdrawals, and higher than exchanges such as Binance, which charges a percentage for withdrawals or a much smaller flat fee, depending on your method of withdrawal.

NDAX’s cryptocurrency withdrawal fees vary by cryptocurrency but are generally cheaper. For instance, the fee for withdrawing XRP is 3 XRP ($4.49 as of this writing), and for Cardano, it’s 3 ADA, or $7.95. Cryptocurrency withdrawals aren’t always cheaper than withdrawing Canadian dollars: for Bitcoin, it’s 0.000399 BTC, or about $23.6. For ETH, it’s 0.0099 ETH, or $40.47.

One way to get around these fees when moving cryptocurrency between exchanges is to sell, say, your ETH on NDAX, use the proceeds to buy a coin with a cheaper withdrawal fee, move that coin to another exchange that offers no withdrawal fees, such as NDAX’s local competitors, Newton or Shakepay, and then rebuy that ETH on those exchanges before the market moves too much. However, this method is cumbersome and you risk the possibility that the market moves against you.

What about institutional traders?

NDAX, like other exchanges, also offers an Over The Counter (OTC) desk for institutional investors. The deal is a little sweeter: There are no deposit or withdrawal fees and “competitive” trading fees, and you’ll get round-the-clock access to an account executive. However, it’s for high rollers only; you’ll have to trade more than $200,000. Institutional investors often get better deals because they provide liquidity to an exchange, greasing the wheels and ensuring that customers always have counterparties to trade against. In addition, percentage-based trading fees can amount to huge profits for an exchange, even if trading fees are lower than those charged to retail traders.

Is NDAX safe?

NDAX is incorporated in the province of Alberta and lists an address in Calgary. It’s registered as a Money Service Business, meaning it’s subject to money laundering and terrorist finance rules, plus any regulation laid down by the Financial Transactions and Reports and Analysis Centre of Canada (FINTRAC).

To this end, NDAX has strict Know Your Customer (KYC) processes; to open an account, NDAX will verify each customer’s identity and check it against government lists. NDAX will attempt to authenticate your name, date of birth, contact information, address, I.D., and social insurance number, among other data. Customer records are held for seven years and are “available upon official request” by a regulator or law enforcement agency.

The company also has an insurance wallet for “insurable incidents, including fraud.” NDAX holds $5 million US dollars to protect its cold wallets against “internal theft and Hardware Security Module (HSM) malfunction,” and a further $3 million US dollars to insure its hot wallets. Cold wallets are cryptocurrency wallets that are not connected to the internet and hot wallets are online-only. NDAX holds 95% of its funds in cold wallets because they’re considered more secure.

The company holds fiat currency (like Canadian dollars) in a segregated bank account at an unnamed Canadian Crown-owned financial institution. This helps the company distribute money to customers in the event of insolvency. NDAX holds a further $5 million CAD to insure against general business liabilities.

Last Updated September 7, 2021

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