Wealthsimple is set to offer its users three times more deposit insurance coverage than the standard set by the Canada Deposit Insurance Corporation (CDIC), which guarantees all Canadian bank deposits up to $100,000.
Calling it an industry first, Wealthsimple said its clients with cash accounts are now eligible for up to $300,000 in CDIC coverage.
“We’re doing everything we can to help them feel confident about where they hold their savings.”
This new offering comes after the collapse of Silicon Valley Bank (SVB), where the United States’ Federal Deposit Insurance Corporation only insured deposits up to $250,000. The US government stepped in and covered deposits over that amount as part of a special emergency measure. Depositors were looking to withdraw as much as $42 billion from SVB at the time of the bank run.
A series of bank failures have followed since then, prompting the FDIC to look into increasing its deposit insurance limit for business payment accounts. There have also been calls from Canadian advocacy groups to raise deposit insurance limits.
In Canada, people looking for more than $100,000 CDIC coverage on their cash normally would have to open multiple bank accounts with CDIC member institutions.
By collaborating with CDIC member institutions to hold cash deposits in its trust, Wealthsimple said it will now enable its users to receive three times that much coverage.
“We have a great base of disciplined investors who don’t panic when markets are down and save for the long haul,” Wealthsimple said in a statement. “We’re doing everything we can to help them feel confident about where they hold their savings.”
This new depositor insurance builds on Wealthsimple’s broader product strategy for its clients with higher balances. Last week, Winnipeg-based Conquest Planning announced its integration with Wealthsimple, allowing the latter’s clients with over $500,000 in net deposits to access Conquest’s financial planning tools.
RELATED: How the Silicon Valley Bank shutdown might impact Canadian tech
As one of Canada’s leading FinTech startups, Wealthsimple has achieved several “firsts” in the industry while it looks to build out its finance “super app.”
In 2022, Wealthsimple also became the first non-bank or credit union to be approved by the Bank of Canada to process transactions directly, instead of having to rely on a third-party financial institution.
Wealthsimple was also the first regulated crypto platform in Canada to launch crypto staking services, which rewards users with tokens for offering their digital assets as collateral to help validate blockchain transactions.
Though it experienced growth through new product launches, Wealthsimple has not been immune to the downturn in the tech sector. Last year, it laid off 13 percent of its staff following a hiring freeze.
Featured image courtesy Unsplash.
