Nichola Saminather

TORONTO (Reuters), a Canadian online brokerage Wealthsimple hopes to create a world where cryptocurrencies can be used in real life, rather than just facilitating trades. However, there are likely to be unexpected costs and unresolved regulatory issues along the way.

Wealthsimple was launched in 2014 to be a stock trading platform. It currently holds C$15 billion (or 11.9 billion) of assets. In August 2020, it added cryptocurrency trading with and and. Since then, Wealthsimple has added additional coins and hosted wallets, inward transfer capabilities and more inward transfers. It has also stated that withdrawals will be possible.

Wealthsimple has been able to take advantage of crypto’s first mover advantage and break into the Canadian financial sector that isn’t dominated by the “Big Six” banks.

Blair Wiley, Wealthsimple’s Chief Law Officer said that they understand the attraction of the asset class and will support it. “We’re looking at … how we can become more nimble, more connected to public blockchains as a key strategic priority.”

The timeframe or investment required to improve the crypto capabilities of Wealthsimple (which is 43% owned and controlled by Power Corp of Canada) were not provided.

The uses of cryptocurrencies include the transfer of funds without intermediaries and fees, as well as alternative fiat currencies. Smart contracts are able to self-execute if certain conditions are fulfilled.

They are accepted by companies ranging from Tesla (NASDAQ) Inc to PayPal(NASDAQ:) Holdings, although speculation and trading remain their main uses.

Wealthsimple will have an advantage when it comes to real-world trading, as they “have a captive market of people interested” in trading, said Anne Connelly from Boston University. She is a professor focusing on blockchain and cryptocurrencies.

Canada has four cryptocurrency companies, all of which are registered with securities regulators. These other crypto companies were only focused on digital assets as per Wealthsimple’s Jan. 11th report. Canada has been focusing on the regulation of cryptocurrencies as securities.

REGULATORY COMPLIANCE

Katrin Tinn is an assistant professor of finance at McGill University. She said that the recent decline in cryptocurrency prices highlights the advantages of trading less. Wealthsimple’s ease-of-use and familiarity are big draws for users of cryptocurrency.

This could make it difficult to add more complicated capabilities.

Connelly stated that, for example, “if the company is still keeping on (users’) private keys or preventing them sending their cryptocurrency elsewhere, then they are selling the vision and benefits of cryptocurrency,” Connelly explained.

Wealthsimple’s proposal to permit cryptocurrency withdrawals brings it closer towards its goal said Andreas Park. Park is a finance professor and cofounder of LedgerHub University’s blockchain research laboratory LedgerHub.

Wealthsimple is expected to “continue to devote considerable resources in order to build up their crypto presence and to ensure regulatory compliance,” Matthew Burgoyne said, a McLeod Law partner who specializes in cryptocurrency and blockchain.

Institutions such as the Commonwealth Bank of Australia (OTC) and Spain’s BBVA(MC:) as well as trading platforms, including those based in the U.S. Robinhood Markets Inc (NASDAQ) has embraced cryptocurrency. Canadian banks generally prohibit the use of credit cards to purchase crypto currencies and avoid dealing with related companies.

Although this restricts the use of cryptocurrency, Wealthsimple is able to establish a presence. Company data shows that the number of Wealthsimple clients who register for Wealthsimple Trade, which also includes cryptocurrency, has tripled between 2021 and 2021.

Park stated, “The emphasis should be placed on the potential of crypto/blockchain and not on whether or not these tokens make good investments.” This is “much more forward-looking and better than the current strategy.”

($1 = 1.2627 Canadian dollars)