Thank you.
Good morning. My name is Evan Thomas. I am the head of legal for Wealthsimple's crypto trading platform. I thank the committee for inviting me today. I hope today to help the committee better understand the Canadian crypto trading industry.
Wealthsimple is a Canadian financial services company. We offer various financial tools, including managed investing and do-it-yourself stock trading, in addition to crypto trading. We serve over three million Canadians across all of our products. We employ over a thousand people. We have a head office in Toronto, but being remote first, we have employees across all 10 provinces.
We have over 30 employees who work exclusively on crypto trading, but many, many other employees support our crypto trading platform among our various other products. To offer crypto trading, we have mobile and web applications that make it simple for Canadians to buy, sell, stake, deposit and withdraw crypto assets that exist in different blockchains. Our clients can keep their crypto with us. We hold it on their behalf like a traditional investment, or they can withdraw it to a blockchain wallet under their control.
Regarding our crypto clients, 77% are under the age of 40. However, I emphasize that these are not young people betting their life savings on crypto. The average crypto account value on our platform is about $1,600. Three-quarters of our clients have invested less than $1,000 in crypto. You see, most crypto clients see crypto as part of their overall investment portfolio. Four out of five also have accounts with us for do-it-yourself stock trading or managed investing.
I highlight, however, that we view blockchain and Web3 as more than simply investment opportunities. We believe strongly that they will have expanding applications. Our goal is to make this exciting technology more accessible to Canadians.
Regarding the broader Canadian crypto trading industry, a recent Ontario Securities Commission survey found that 12% of adult Canadians currently own crypto assets. That is about 3.75 million Canadians. A recent Bank of Canada paper has very similar numbers. It found that the number of Canadian bitcoin owners nearly tripled between 2020 and 2021.
On the platform side—that is, the platforms that buy and sell crypto—there are about 11 Canadian-based crypto trading platforms, including ours. Most serve Canadians primarily, if not exclusively. There are also some companies that buy and sell crypto but don't hold it for clients. An example would be operators of bitcoin teller machines. There are also foreign platforms that serve many countries, including Canada. At least 15 of those platforms are in the Canadian market. In fact, three out of the four trading platforms most used by Canadians are headquartered outside of Canada.
Canada is a global leader in the regulation of crypto trading platforms like ours. Platforms that hold crypto for clients must register with Canadian securities regulators and comply with specific requirements. For example, we must keep at least 80% of our clients' crypto assets with regulated and insured crypto custodians. We do ongoing due diligence on every crypto asset that we list. We create and update risk disclosures for every asset. We hold our clients' crypto assets in trust. We do not lend out or use our clients' property, ever. We are also registered with FINTRAC, Canada's financial intelligence agency, and we have built a robust anti-money-laundering and sanctions compliance program.
This regulatory framework evolved primarily in response to the 2019 failure of a Canadian crypto exchange called QuadrigaCX. As a result, Canada is further ahead than most jurisdictions when it comes to the regulation of crypto trading.
That brings me to the failures of FTX and other crypto businesses that my colleagues have mentioned.
In each case, there were failures of governance, compliance, risk management and, in some cases, failures of ethics and honesty. These risk and failures, I emphasize, are organizational, not technological; that is, these businesses fail because of how they run their businesses, not because of blockchain or crypto.
The regulations that we have in Canada are very rightly directed at preventing these organizational risks and failures. While there is a strong regulatory foundation in Canada, it is a work in progress. For example, as of today, no foreign platform has registered under the Canadian securities regulatory framework. Meanwhile, nine out of 11 Canadian platforms have. This highlights the need for clear and consistently applied regulations for crypto trading platforms that serve Canadians, whether based inside or outside of Canada. This requires effective coordination between agencies and federal and provincial governments.
There are many areas where Parliament can play a role with respect to payment, asset custody, insurance, taxation and even bankruptcy loss.
Wealthsimple and I are grateful for the opportunity to assist the committee today. I am now available to answer your questions.
Thank you.