Wealthsimple’s latest step into the cryptocurrency field has been highly sought by its users, according to the FinTech business. Users can now deposit cryptocurrencies from external wallets into Wealthsimple Crypto as of November 10, according to the business.
Before announcing its public introduction, Wealthsimple had been beta testing the feature since the end of October. Users can move Bitcoin and Ethereum from external wallets to their Wealthsimple accounts using the wallet feature. In the following weeks, Wealthsimple expects to allow withdrawals, as well as the addition of more cryptocurrencies at a later date.
This, according to a Wealthsimple spokesman, is the first stage in the company’s transition from a closed-loop system to one that includes capability for external wallets.
“This is an important step in taking our crypto platform from a closed-loop system, to a platform that gives our clients the ability to explore the different applications and opportunities of crypto,” In a statement to BetaKit, Wealthsimple stated.“For many people, having direct control over their digital assets is a huge part of cryptocurrency’s value proposition. They want the autonomy to control their assets directly, without needing to trust centralized intermediaries. And the only real way to have that autonomy is with a crypto wallet.”
Users may send, receive, and spend their bitcoin via wallets, which are an important aspect of accessing and managing crypto assets. When consumers buy crypto on a trading platform, they are typically given the choice of storing the ‘keys’ to their coins in an account or moving the currency to a personal crypto wallet. Hot wallets are those that are linked to the internet, whereas cold wallets are those that are not.
Wealthsimple does not currently hold any cryptocurrencies because it does not have its own wallet product, unlike Coinbase offers a Coinbase Wallet in addition to its trading platform. Gemini Trust Company, a famous cryptocurrency exchange and custodian founded by the Winklevoss brothers and regulated by the New York State Department of Financial Services, holds Wealthsimple Crypto’s assets.
“Introducing wallets — and with it transfers — will give our clients the ability to use their assets to interact with different blockchain applications like NFTs, gaming, decentralized finance and more,” Danish Ajmeri, head of crypto at Wealthsimple, told BetaKit. “We also know self-custody is also an important principle in crypto and we want to support that ethos by allowing clients to do it, while educating them along the way.
Wealthsimple has been in the cryptocurrency trading market since 2020, and has gained provisional approval from the Canadian Securities Administrators (CSA) to test its crypto trading platform for two years through its Sandbox programme. The platform was the first in Canada to be regulated. A few more Canadian crypto trading startups have lately negotiated with regulators to obtain exemptions.
Wealthsimple’s move into crypto was part of a larger effort to diversify its product offering. Wealthsimple, which began with a focus on low-cost robo-advice six years ago, has now grown to include savings accounts, stock buying and selling, tax filing, and, most recently, cryptocurrency. A recent Globe and Mail piece questioned if Wealthsimple had strayed from its founding concept of passive and easy investment, citing the difficulties of earning a profit for robo-advising companies.
Wealthsimple’s entry into crypto has paid off, since it coincided with the company’s most successful period to date. After starting the new year ranked 39, Wealthsimple’s trading platform rose to number one overall in the Canadian Apple App Store during the GameStop trading frenzy in January. In addition, the company reported a 50% rise in sign-ups and a 50% increase in trading volume.
Wealthsimple secured a $750 million CAD ($250 million in primary capital) fundraising round in May at a post-money valuation of $5 billion CAD, with $15 billion in assets under management across its financial solutions and more than two million consumers.
Wealthsimple co-founder and CEO Michael Katchen described the investment as a “resounding vote of confidence” at the time, saying that the company had ambitions to launch further financial products.
When asked what crypto trends Wealthsimple is following, Ajmeri said the company is looking into and researching areas like DeFi and NFTs. “Our goal is to help make crypto more accessible in a safe and responsible way, while making updates to our ecosystem with the future of cryptocurrency in mind,” he said.