Toronto-based FinTech company Wealthsimple, which offers cryptocurrency trading alongside other financial services, is adding Calgary’s Tetra Trust as its first Canadian digital asset custodian.
This partnership, which is subject to approval by the Canadian Investment Regulatory Organization (CIRO), stands to diversify Wealthsimple’s crypto partners beyond its two existing custodians. Tetra Trust will enable Wealthsimple to securely store its customers’ digital assets in Canada.
In an interview with BetaKit, Tetra Trust CEO Didier Lavallee claimed that most Canadians that hold crypto are very exposed to the United States (US), and argued that this “creates massive consumer and jurisdictional risks.”
“We estimate that 85 percent of Canadian crypto is stored in the US, and that is a huge problem.”
Didier Lavallee,
Tetra Trust
Tetra Trust has been making this case for some time now. Lavallee said that this US exposure is an issue in part thanks to precedents set by past crypto insolvencies south of the border, like that of Celsius, where he claimed Canadians lost their funds thanks to US court rulings.
“We estimate that 85 percent of Canadian crypto is stored in the US, and that is a huge problem,” Lavallee said.
“With recent geopolitical changes, tariff discussions, [and] patriotic sentiment, the topic is back in full force,” Lavallee said. “People care more about asset sovereignty and where their crypto is stored, and it’s given us a second wind.”
In a LinkedIn post, Wealthsimple chief legal officer Blair Wiley described Wealthsimple’s custodial agreement with Tetra Trust as “both strategic and patriotic,” noting it brings together two Canadian FinTech firms that were first to be regulated in their respective domains.
Wealthsimple became Canada’s first regulated crypto trading platform in 2020. “We’ve been market leaders ever since, and our determination to be the best crypto asset platform in Canada is stronger than ever,” Wiley said. “Especially as we look to a future where four of the five largest platforms operating in Canada will be foreign-owned.”
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Tetra Trust followed suit in 2021 when it became Canada’s first regulated crypto custodian after becoming a licensed trust company in Alberta and a qualified national-level custodian. Fellow Calgary crypto custodian Balance took a similar path last year. Both moved from Toronto to Calgary to take advantage of what they saw as Alberta’s more crypto-friendly regulatory regime.
Founded in 2019, Tetra Trust was initially based in Toronto and incubated within regulated Canadian crypto trading platform Coinsquare. “Tetra came to light because of QuadrigaCX,” Lavallee said. “[We] basically created an entity to properly safeguard Canadian [digital] assets because you had a founder leave with the key and the crypto.”
Tetra Trust stores digital assets for crypto exchanges and a range of other entities, including exchange-traded funds and family offices. Tetra Trust uses third-party cold storage and recently announced its own software platform. The company claims to have a formal relationship with nearly half of Canada’s registered crypto platforms, with clients including 3iQ, Ndax, and now Wealthsimple, among others.
Lavallee said Tetra Trust currently has 15 to 20 employees and holds north of $2.5 billion CAD in digital assets under custody. Since 2021, Tetra Trust has raised $15 million in equity funding and sold $10 million in secondary. After reaching profitability last year, Lavallee expects Tetra Trust to generate between $6 million and $10 million in revenue this year.
Coinsquare and its stake in Tetra Trust were acquired by Toronto crypto firm WonderFi in 2023. Earlier this year, Urbana purchased a significant portion of Toronto-based WonderFi’s interest in Tetra Trust, bringing its total equity stake to nearly 56 percent. Last week, WonderFi agreed to a sale to US-based Robinhood, which plans to develop its offering in Canada in a move that could put it in competition with Wealthsimple.
Today, Tetra Trust’s backers include Urbana Corporation, the Canadian Securities Exchange, Icebook Investments Corp, and Coinbase Ventures—the venture arm of Coinbase, which also offers custody to Canadians in addition to crypto trading and other services that Tetra Trust does not.
As big global players have entered Canadian crypto aggressively, Lavallee said he has started to see Canadian crypto companies “band more together” in response.
In the last few months, “more so than even in the last two years,” Lavallee said Tetra Trust has seen an uptick in businesses approaching the firm to help reduce their exposure to the US.
Feature image courtesy Tetra Trust.