Wealthsimple is widely regarded as the Canadian version of the famous Robinhood app, which is partly responsible for commission-free trading in the US.
Wealthsimple offers both robo-advisory and commission-free stock trading, and from September 2020, it also allows you to invest in cryptocurrencies.
With several other crypto trading platforms available, how does Wealthsimple stand out?
If you are planning to dip your toes in crypto trading, understanding the pros and cons of different platforms can help you make an informed (and affordable) choice, whether or not you are one of the 1.5 million Canadians who already use Wealthsimple products.
This is what we will discuss in this Wealthsimple Crypto review.
Crypto Trading Platform
The platform makes cryptocurrency investing easy for Canadians, but there are many limitations and a high bid-ask spread.
Pros of Wealthsimple Crypto
- Easy to grasp crypto trading
- Simple, no-fee trades
- No account minimum required
- Good for beginners
Cons of Wealthsimple Crypto
- Has a wide bid-ask spread (typically between 1.5%-2.5%)
- Can’t transfer crypto out from the app to a digital wallet
What is Wealthsimple Crypto?
Wealthsimple Crypto is simply the crypto trading and investing “feature” of the investment platform Wealthsimple. It’s the most popular commission-free trading platform, and robo-advisor in the country, and its investment asset range now includes crypto as well.
Before we dive into Wealthsimple Crypto, it’s important to understand the difference between Wealthsimple Invest and Wealthsimple Trade. Wealthsimple Invest is the robo-advisory service that creates and manages an investment portfolio for you and offers automatic rebalancing at a fee of 0.5% to 0.4% (based on your Assets Under Management).
Wealthsimple Trade is a self-directed investment platform that allows you to trade stocks and ETFs without paying any fees or commissions. With Wealthsimple Trade, you can direct your own trades and have complete control over your investment portfolio, and it’s this platform that allows you to trade in crypto as well. Wealthsimple Crypto is part of the Wealthsimple Trade app.
Wealthsimple Crypto key features:
- No minimum account balance.
- No deposit and withdrawal fees.
- Coins are held by Gemini Trust Company LLC, which is regulated by NYSDFS.
- Easy trading process.
True to its name, Wealthsimple makes crypto trading “simple” for its users. However, this simplicity comes with certain limitations.
What Can You Buy With Wealthsimple Crypto?
Wealthsimple allows you to buy 34 different cryptocurrencies (as of Jan 1, 2022) Here is a full list of available coins:
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The two major offerings are the household names you should all know:
Bitcoin: Bitcoin is the first cryptocurrency ever introduced. Even though Bitcoin was presented as an alternative to fiat and a global currency, major governments’ reluctance to offer it that status has relegated it to “property” or an asset. The individual, entity, or group behind this cryptocurrency is still unknown to the world and is known simply as “Satoshi Nakamoto.”
Ethereum: Ethereum is technically the most widely used “blockchain” in the world, and “Ether” is the cryptocurrency that’s native to that blockchain. But the word Ethereum is used interchangeably for both the cryptocurrency and the blockchain that supports it. It was introduced by a Russian-Canadian programmer Vitalik Buterin.
These are two of the most commonly traded cryptocurrencies around the world. Wealthsimple does have plans to add more cryptocurrencies, but as of now, Bitcoin and Ethereum are the only two currencies you can buy on its trading platform.
Is Wealthsimple Crypto Safe and Legit?
Yes. While it’s typically considered a con that you can’t take your cryptocurrency out of the Wealthsimple app and save it in your own cold or hot digital wallet, it has made the system relatively more secure. You can only deposit and withdraw Canadian dollars from the app, and the cryptocurrencies are held in the app. More accurately, your digital coins are held by Gemini Trust Company LLC, a US-based cryptocurrency custodian that’s regulated by the New York State Department of Financial Services (NYSDFS).
When you buy and sell a cryptocurrency, the Trade happens through a Wealthsimple subsidiary Wealthsimple Digital Assets Inc. It is registered as a “restricted dealer” (as a derivatives dealer in Quebec) and is authorized by FINTRAC.
The company makes money by leveraging the buy and sell spread, which is quite hefty. And even though the crypto assets are not insured by the traditional institutions (CIPF and CIDC), Wealthsimple Crypto is adequately safe and legit.
Should You Buy Cryptocurrencies?
Cryptocurrencies are highly volatile assets. Many investors who are unfamiliar with the exact technology behind cryptocurrency (the blockchain) believe this volatility is because it’s a “digital-native” asset, which makes it very different from all other investment assets that are backed up by something tangible.
Compared to them, cryptocurrencies seem ephemeral and intangible. But that’s not all. One of the major drivers of volatility in the cryptocurrency market is speculation.
The value of the cryptocurrencies go up and down based on speculative investor bets. Other factors like government sanctions, universal adaption (which is still in its initial phases), tax treatment, and institutional investors entering the market also play an important role in deciding the valuation of these currencies.
Some of the major pros of investing in cryptocurrencies are:
- Rapid growth potential.
- Exceptional returns (compared to most traditional investment assets).
- Ease of trading.
Major cons of crypto investing include:
- High-levels of volatility.
- Requires in-depth know-how of the market.
Wealthsimple Crypto Promo Offers and Cash Bonus
Opening a Wealthsimple crypto account and trading cryptocurrencies is deceptively simple.
There are just three steps:
- You can create a log-in from the Wealthsimple website.
- Download the trading app.
- And create a Wealthsimple Crypto account.
Click here for a signup, and you will enjoy a $50 bonus. That’s a decent return right off the bat.
If you understand the market, investing in cryptocurrencies can be a great way to diversify your investment portfolio and benefit from unconventionally high-returns.
But if your profit margin is severely impacted by the wide spread and you want to trade other cryptocurrencies as well, Wealthsimple Crypto might not be the ideal fit for you.
Wealthsimple Trade overall has made my list of the best trading platforms in Canada, read more about it here.