WonderFi (WNDR), Coinsquare and CoinSmart as a combined entity will have a total of 1.65 million users and more than $600 million in assets under custody.
On Monday, April 3, three Canadian crypto exchanges – WonderFi (WNDR), Coinsquare and CoinSmart – announced their plan for a merger thereby creating the country’s largest regulated crypto trading platform.
Executives from the respective exchanges said that the merger would help them function effectively while giving a new edge in business growth. These three firms have a combined 1.65 million users and shall have more than $600 million in assets under custody.
The news comes at a time when crypto exchanges have been facing growing regulatory scrutiny after the fallout of crypto exchange FTX in November 2022. Dean Skurka, president and interim CEO of WonderFi, said that amid the heightened regulatory environment, the merger will offer a “path to profitability”. In a television interview with Bloomberg, he further added:
“As regulatory costs increase I think it naturally leads to consolidation and acquisition opportunities like we’ve seen today. Certainly, with a combined company now we believe the scale will address a lot of those concerns, and there will be a clear path to profitability.”
As part of the merger, WondeFi will issue about 269,727,080 common shares to Coinsquare’s shareholders and 119,181,733 common shares to CoinSmart’s shareholders. Of the combined entity, WonderFi shareholders will own 38 percent of the company. Similarly, the Coinsquare shareholders will own 43 percent of the combined entity while CoinSmart shareholders will own 19 percent.
Popular SharkTank investor Kevin O’Leary is also a strategic investor in WonderFi. He said that this merger of three Canadian crypto exchanges sets up a model for the world in terms of crypto regulations. O’Leary added: “If you can’t play ball with the regulator, you will not exist. Canada will be the shining example of how it’s going to go in every single geography.”
Growing Crypto Regulations in Canada
Just like the US regulators, the Canadian regulators have also been tightening their grip on the crypto sector. In October 2022, Coinsquare became the first Canadian crypto platform to register with the Investment Industry Regulatory Organization (IIROC).
Thus, the regulated crypto trading business of the merged entity will be “consolidated under Coinsquare’s investment dealer registrant” and new SRO member, Coinsquare Capital Markets Ltd. “Regulation is now coming first and it’s a competitive advantage,” said Coinsquare CEO Martin Piszel.
Justin Hartzman, co-founder and CEO of CoinSmart, said that merging the company would give its customers a “regulated, safe environment” for their money. He also added that the regulation-first approach to the crypto trading platform will give customers reassurance.