Wealthsimple gets green light to test crypto platfom

Wealthsimple has been granted relief to operate Canada’s first regulated crypto trading platform under the Canadian Securities Administrators’ (CSA) regulatory sandbox — an initiative that allows firms to test innovative ideas without meeting traditional regulatory requirements.

Following an application to the CSA’s sandbox, regulators have granted relief from certain registration, prospectus, and trade reporting requirements, to allow Wealthsimple Digital Assets Inc. to operate a crypto trading platform.

The relief will allow the firm to operate in a test environment for 24 months, or until the firm becomes registered with the Investment Industry Regulatory Organization of Canada (IIROC), whichever comes first.

“We are pleased to grant time-limited registration and relief for WealthSimple Digital Asset, which today becomes the first crypto asset platform to be registered with Canadian securities regulators,” said Pat Chaukos, director of the Ontario Securities Commission’s (OSC) new Office of Economic Growth and Innovation, in a statement.

“This is an important milestone for the OSC and the CSA Regulatory Sandbox, which worked together to tailor regulatory requirements for this crypto asset trading platform that will offer bitcoin and ether to Canadian investors,” she said.

In a notice setting out the exemption, the CSA indicated that the firm will start operating on a beta testing basis.

“Beta testing will involve inviting individuals, who have signed up to join the Wealthsimple Crypto waitlist, to open accounts and begin using the platform,” the notice said.

It will “solicit feedback from early users to improve the platform and transition from beta testing to normal operation.”

To address some of the key concerns with crypto trading, the firm won’t hold any crypto assets in its own hot or cold wallets. Instead, a third-party custodian, Gemini Trust Company, LLC, which is regulated by the New York State Department of Financial Services (DFS), will act as custodian of its clients’ cryptoassets, the notice said.

The firm’s accounts also won’t be covered by the Canadian Investor Protection Fund (CIPF).

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.