We believe in fair, competitive and secure access to crypto

From our Chief Legal Officer, Blair Wiley

Recent mainstream news does not paint an encouraging picture for crypto investors. Despite important technology advances and exciting new projects in the crypto space, the first half of 2022 has been tumultuous. We have witnessed large-scale security breaches, insolvencies of lending platforms, and dramatic swings in market prices dominate headlines. Many retail investors have been left with unanswered questions.

Volatility is not new to this space. We first launched Wealthsimple Crypto in 2020 — right on the heels of Quadriga’s collapse at a time when asset prices were depressed. While the demand for crypto assets was growing, many of the same problems around security, misuse of assets, and lack of accountability to investors were prevalent. We knew we had a unique opportunity, as a regulated securities dealer and an innovator, to build a secure platform for Canadian crypto investors. We believed then, like we do now, that we could offer a much higher level of transparency and operational excellence.

This set the course for what Wealthsimple Crypto is today, and it continues to drive our decision-making. In the two years since we launched Canada’s first regulated crypto platform, we have remained laser focused on finding the balance between our roots as a builder and innovator, and our responsibility as a registered dealer, to protect investors and foster fair, efficient and competitive markets.

We have invested significant time and resources into building one of Canada’s biggest crypto teams, made up of highly-skilled legal, compliance, security, finance, operations, product, and engineering professionals. Together, we’ve built a platform where Canadians can access crypto while feeling confident that, by choosing us, the safety, security and ownership of their assets is protected and prioritized.

Here’s what that looks like.

We applied our existing infrastructure as a registered securities dealer to our crypto operations.

From the outset, we have focused on applying the most important pillars of financial regulation to crypto asset trading, while also working with provincial securities regulators to ensure consistency with investor protection principles long established for traditional capital markets.

What does this mean in practice? A few examples:

• Most of our clients’ assets are held in cold storage, through third-party custodians that meet high standards set by regulators. By storing crypto through cold storage, it’s offline, further reducing risk from cyberthreats.
• We’ve secured insurance to address the unique risks and benefits of this asset class.
• We thoroughly review any new token against our Asset Review Policy before listing on our platform to evaluate its technology, economics, demand and functionality.
• We use multiple third party liquidity providers to monitor prices and help give our clients the best price for their crypto order. Using multiple providers also makes our platform more resilient and less likely to be impacted by outages. And, unlike some crypto exchanges, we never trade against our clients.
• We have 24/7 transaction monitoring on all crypto deposits and withdrawals using industry-leading blockchain analytics software.
• We are registered as a virtual currency money services business with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and are subject to high standards of business conduct with regular audits.

Your crypto is your crypto. Nothing will change that.

We can’t control market conditions, but we can control what happens in the unlikely event something catastrophic happens to our business. By holding our client’s crypto in trust, it is protected from creditors in the event of bankruptcy. And we will not repurpose crypto on our platform through lending, pledging, or otherwise releasing any of the crypto assets to retail or institutional borrowers.

We use a “zero-trust” security model.

We’ve taken our industry-leading security infrastructure and applied it to our crypto operations. Our security controls and data classifications adhere to all regulatory requirements. These security systems are diligently vetted and audited to assess risk, ensure clear protocols, and evaluate functionality. And we use industry leading encryption for data within and outside of our ecosystem.

Our approach to security is built around the concept of “continuous assurance.” Rather than point-in-time penetration testing, we have an always-on, always-testing model driven by our public bug bounty program. We pay experts to try and find vulnerabilities in our system so we can address them head-on. This investment is worth it: to date, our crypto operations have not had a security or operational failure.

We believe in the tough questions.

Client trust and transparency is the foundation for how Wealthsimple came to be. We’ve held ourselves to the highest standards and it’s how we’ll continue to build. Crypto is no different and our work isn’t done.

We believe the greatest success comes from engaging in substantive and meaningful ways with clients. That means treating this space as a two-way dialogue. We encourage our clients to ask critical questions of any platform they trust with their investments. Questions around custody and ownership, regulatory compliance, liquidity, security, trade routing, legal rights of the investor and more. In emerging sectors where rules are undeveloped and not applied equally to all, these things matter even more.

Questions about what you just read? Reach out to us!