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Wealthsimple Crypto Overview
- All-in-one app that features banking, stocks and cryptocurrency options
- Wealthsimple Crypto is available to Canadians only
- Wealthsimple is very safe and insured by several regulators
- One of the fastest growing online financial institutions in the world
Wealthsimple Pros & Cons
Users can also put funds into investments in the traditional financial markets
Savings accounts available
Has a large number of educational resources for new investors
Tax preparation services and tax-conscious investment accounts
Trading fees hidden in buy and sell price spreads
Custodial wallet setup
Wealthsimple Crypto specifically is only available in Canada at this time
Real fees for crypto asset purchases are a bit high
What is Wealthsimple?
Wealthsimple is just what it sounds like: a simple way for anyone in Canada, the United States, or the United Kingdom to manage their savings and investments in order to generate wealth over time. This is definitely not a platform that is solely focused on bitcoin and other crypto currencies, as the ability to purchase bitcoin and ether was added seven years into the existence of the platform. That said, Wealthsimple’s integrations with the cryptocurrency space could increase over time.
Wealthsimple currently has more than CAD $5 billion worth of assets under management. Tax-focused accounts are available on this platform, and users who deposit $500,000 or more into Wealthsimple are able to gain access to additional financial advice from advanced specialists.
How does Wealthsimple’s crypto feature work?
Wealthsimple’s crypto offerings work in a manner similar to most of the other traditional fintech platform that have decided to add bitcoin or other crypto assets to their suite of financial services. For now, Wealthsimple is sticking with bitcoin and ether as the only two crypto assets available on the platform, and these two coins became available for trade in Canada back in August of 2020. Cryptocurrency trading is not yet available in the United States or the United Kingdom.
Bitcoin enthusiasts who are interested in the technology behind this new advancement in finance will not be able to take full custody over their own private keys via this platform. The bitcoin and ether purchased on this platform is held by a third-party custodian that will be familiar for anyone who has been tracking the cryptocurrency space for some time, Gemini Trust Company.
The cryptocurrency trading takes place in a new, separate part of the overall Wealthsimple platform, known as Wealthsimple Crypto.
Which currencies can you buy and sell?
In terms of cryptocurrencies specifically, users are only able to purchase bitcoin and ether at this time. That said, the company has said they plan to support more altcoins in the future.
Wealthsimple does not offer forex trading, and users will make deposits and withdrawals denominated in their local fiat currency.
Wealthsimple is pretty restricted in terms of which countries the investment app can be used. This is even more true when it comes to the Wealthsimple Crypto section of the app.
In terms of Wealthsimple itself, the platform is currently available in Canada, the United Kingdom, and the United States. However, it should be noted that the trading of bitcoin and ether is currently only available to users from Canada.
While Wealthsimple does a good bit of marketing around the concept of commission-free trading on their platform, the reality is this does not mean there are no fees for using Wealthsimple Crypto.
If you’re only interested in trading cryptocurrencies, then it’s true that there are no fees associated with this sort of activity. However, Wealthsimple users should look closely at the price they are being offered for a bitcoin or ether buy order before they finalize their purchase. Wealthsimple makes money on these trades by adding a spread to the rates they’re able to obtain from other sources. For example, a user who wants to buy some bitcoin may find that the price quoted on Wealthsimple is 1.5% higher or more than other platforms when they go to make their first buy order.
The spread on bitcoin purchases usually equates to a roughly 1.75% on orders, which is a bit worse than Coinbase, which is the world’s most popular bitcoin brokerage.
If you want to dip your toes into Wealthsimple’s offerings in the traditional markets as well, you’ll notice an increase in the types of fees you need to worry about. For example, the Wealthsimple Invest and Wealthsimple Save accounts come with respective 0.5% and 0.25% management fees. However, users who deposit more than $100,000 are able to gain access to a 0.4% management fee on Wealthsimple Invest accounts.
Supported crypto wallets
Wealthsimple does not support any integrations with cryptocurrency wallets. Many of the financial technology platfroms that are more focused on the traditional investment world tend to opt for custodial setups rather than giving people full control over their own bitcoin private keys because it is still rather difficult for crypto newcomers to figure out how to properly manage their own crypto holdings.
Wealthsimple has not announced any plans to enable the ability to deposit or withdraw cryptocurrency via the underlying networks that power these decentralized financial systems. If you want to use bitcoin as it was originally intended, then you will need to look elsewhere.
How to Sign Up for Wealthsimple
Wealthsimple is focused on making their entire platform as simple and easy-to-use as humanly possible, and this focus on usability extends to their sign-up process.
To get started, you can use either the Wealthsimple website or their mobile application. The first information you will need to hand over to the company is your email address and country of residence. You’ll also need to create a password during this first step.
On the next page, Wealthsimple will collect more personal information about you. This includes things like your full name and phone number, your employment status, and your mailing address. During this part of the account creation process, you’ll also need to share your social security number (or the equivalent in your country).
The next part of the sign-up process is rather unique, as Wealthsimple will ask you questions about your financial life in order to assess a proper plan for you going forward. This is sort of a questionnaire that asks you questions about how you would invest your money if you were doing it on your own and how much money you make.
After you get through all of the questions about your finances, you will receive an email and should be able to fund your account. This entire process should only take a few minutes of your time.
Wealthsimple Frequently Asked Questions
Unfortunately, it is not possible to transfer your bitcoin out of the Wealthsimple app once you’ve made a purchase. This is because Wealthsimple Crypto has no way of making Bitcoin payments. It’s unclear if Wealthsimple will add this functionality in the near future, but it seems unlikely, as the fintech app is mostly focused on helping users with their traditional savings and investment strategies.
Wealthsimple itself was launched all the way back in 2014, but the crypto section of the fintech app only became available in the middle of 2020. Currently, Wealthsimple Crypto is still not available in the United States or the United Kingdom.
The taxes related to your cryptocurrency trading will depend on a variety of factors, including whether you decide to sell your crypto holdings and which country’s tax laws apply to you. In most cases, you will need to pay some capital gains taxes on profits that are made while trading bitcoin and ether in the Wealthsimple app.
It should be noted that Wealthsimple also integrates a variety of features related to filing taxes and creating a tax-conscious investment account.
You are not able to hold crypto assets in a tax-free savings account (TFSA) on the Wealthsimple platform. Currently, investors are not allowed to hold bitcoin or other cryptocurrencies in a TFSA. Anyone who wants some exposure to the price of bitcoin in their TFSA should look at various publicly-traded companies that either work in the Bitcoin space or hold bitcoin on their balance sheets.