Canada’s crypto exchange landscape appears to be consolidating after Coinsquare, one of the largest digital asset trading platforms in the country, acquired CoinSmart for an undisclosed amount.
On Thursday, Coinsquare announced that it had entered into a definitive agreement to purchase all of the issued and outstanding shares of CoinSmart’s wholly-owned subsidiary, Simply Digital. Once the deal is finalized, CoinSmart will hold an ownership stake of approximately 12% in Coinsquare on a pro forma basis.
Shares of the CoinSmart crypto exchange, which trades on the NEO Exchange, rose 67% on Friday, largely in response to the news.
The acquisition makes Coinsquare one of Canada’s largest crypto exchanges and expands its operational and business capabilities. Founded in 2014, Coinsquare has expanded its service offering to include retail and institutional trading, crypto payment processing and digital asset custody.
CoinSmart was co-founded in 2018 by Justin Hartzman, who was also the CEO of the company. Following the acquisition, Hartzman will join Coinsquare’s executive team.
As a publicly traded company, CoinSmart releases its financial statements quarterly. In its annual summary released on April 1, the company reported gross sales of $16.7 million in 2021, an increase of 357% year-over-year. Retail trading volume grew 875%, likely as a result of the 2021 Bitcoin (BTC) bull market.
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Coinsquare is one of only two crypto exchanges operating in Canada to pre-register with their major regulators as they work towards full compliance with securities laws. Pre-registration requirements are set by the Canadian Securities Administrators, or CSA, and ensure crypto exchanges remain operational while their full applications are reviewed at CSA.
— CoinSmart (@CoinSmart) August 8, 2022
In an interview with TUSEN on the sidelines of the futuristic conference in Toronto in August, Coinsquare chief operating officer Eric Richmond explained that the crypto exchange registered with the Investment Industry Regulatory Organization of Canada in November 2020, or IIROC.
Crypto adoption in Canada is on the rise, but as in other countries, participation is largely based on underlying market conditions. According to a KPMG survey, adoption is also growing within institutional circles due to crypto’s perceived upside and innovative potential.