Last week, Calgary-based digital asset custodian Balance registered its subsidiary, Balance Trust Company, as a special purpose trust with Alberta’s Treasury Board and Finance (ATBF).
Balance co-founder and CEO George Bordianu claimed to BetaKit that this makes Balance the “second-ever registered trust and qualified custodian for crypto assets in Canada,” alongside competitor and fellow Calgary company Tetra Trust, which secured regulatory approval in 2021. Per its website, Ottawa’s Brane Trust—which was acquired last year by Toronto-based decentralized finance firm Wellfield Technologies—is still working towards this milestone.
In a LinkedIn post from last week, Bordianu said this process took Balance nearly two years and $10 million CAD of regulatory capital to complete. “It’s been beyond challenging, but the satisfaction to see our vision materialize is immense,” he added.
“It’s been beyond challenging, but the satisfaction to see our vision materialize is immense.”
George Bordianu, Balance
According to Bordianu, this registration enables Balance to offer its services to other regulated entities, including public exchange-traded funds (ETFs) and mutual fund issuers, registered investment advisers, restricted dealer crypto trading platforms (CTPs), stablecoin providers, and accredited investors in Alberta and other authorized jurisdictions across Canada and the United States (US).
To date, Canadian asset managers and CTPs have been forced to rely on US digital asset custodians due to a lack of regulated domestic options, Bordianu said.
“Across all ETFs and regulated [CTPs] in Canada, we’ve sent over $5 billion worth of crypto assets to Coinbase, Gemini, and BitGo in the US,” he added.
“We no longer need to do that [as] we now have a proper local alternative. Hopefully, we can bring some of those assets back home also.”
Founded in 2017, Balance first introduced its custody services in a closed pilot during the following year ahead of its public launch in 2019. Today, Bordianu claims Balance is Canada’s oldest and largest Canadian digital asset custodian. Earlier this year, Balance surpassed $2 billion in assets under custody once again as the crypto market has regained its footing, and the company’s website currently claims that Balance stores more than $2.5 billion.
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In recent years, the Government of Alberta has pitched the province as a crypto destination. Balance has been registered in Alberta since 2021 when it established an office in Edmonton that it later moved to Calgary. In August 2023, Balance filed its application to incorporate Balance Trust Company with ATBF under the province’s Loan and Trust Corporations Act.
This January, Balance relocated its headquarters and core business from Toronto to Calgary. “Ontario gave us the solid ground we needed to start, however, Alberta’s regulatory framework and positive reception to our industry gives us the foundation needed to grow,” Bordianu said in a statement at the time.
Bordianu cited the existence of a special-purpose regime for provincial trusts in Alberta as “extremely attractive,” adding that this “provides the structure we need to become a qualified custodian, without having to satisfy regulatory requirements pertaining to activities we don’t perform such as deposit-taking business.”
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“We are proud to support innovative companies like Balance Trust Company,” Alberta Minister of Finance and Treasury Board president Nate Horner said in a statement. “With its registration, Alberta strengthens its position as a leader in the finance and financial technology sector.”
To meet the definition of a qualified Canadian custodian, Balance Trust Company required more than $10 million in net equity. Bordianu said this required Balance to take $10 million of its capital, earmark that money as restricted cash, and set it aside to act as a regulatory capital base, where it must remain liquid and unencumbered, which he noted “was not an easy lift.”
Bordianu claimed that Balance is the only qualified Canadian digital asset custodian today with a local, fully proprietary technology stack, noting that the company does not leverage third-party solutions such as Fireblocks.
With this registration, Bordianu told BetaKit that Balance is now a qualified custodian in both Canada and the US, where it plans to focus some of its efforts on expanding.
Feature image courtesy Balance.