Overview

Loss limits are a regulatory requirement that provides precautions to clients with a Wealthsimple Crypto account who have experienced significant realized or unrealized losses.

The terms and conditions set by the Canadian Securities Administrators, which permit us to hold Crypto accounts, require Wealthsimple to collect certain information about your financial circumstances, experience in trading, and risk tolerance. The terms and conditions also require us to apply a client limit (or “loss limit”) to each client based on the information we collect.

How loss limits are calculated

Both new and existing crypto clients are required to provide information that allows us to understand their risk profile, which we consider when calculating crypto loss limits.

• For new clients, the risk survey is part of the Crypto account opening process.
• For existing clients, we'll prompt you to review and update your information on an annual basis at a minimum.

To achieve this, we'll ask you about your previous investment experience, your risk tolerance, and your current financial status. If your responses indicate that your risk tolerance doesn't align with the requirements for trading and investing in cryptocurrency assets, we reserve the right to limit your access or prohibit you from establishing an account.

Loss limits are unique to each Crypto account. They take into account several factors, including your:

• Income
• Net assets
• Prior crypto experience
• Prior investment experience
• Risk tolerance

Loss limit calculation equation

When calculating losses to determine if you're approaching your loss limit, we use the following equation: Cumulative Lifetime Portfolio Gains/Losses(PnL) = Cumulative Realized Gains/Losses + Unrealized Gains/Losses

• Cumulative Realized Gains/Losses update when you sell or withdraw an asset from our platform.
• Unrealized Gains/Losses are calculated daily based on Average Cost Basis.
• Average Cost Basis for each crypto asset updates when you buy or deposit an asset.

Loss limit notifications

Loss limit notifications warn you that you've experienced significant realized or unrealized losses.

If the realized or unrealized loss in your account approaches or exceeds your loss limit, we'll notify you by email. This tells you that there have been losses within your account.

While we can’t provide investment advice, we want you to know how your account is performing and consider whether your crypto investments remain aligned with your financial goals.

Entering the cooldown period after exceeding your loss limit

If you exceed your loss limit and continue to trade and incur losses (realized or unrealized) in your crypto account, your crypto account may be subject to an account cooldown. During the cooldown period, you can't purchase additional crypto assets for 30 days.

You can still sell existing positions in crypto assets, stake applicable assets, and withdraw crypto assets during the cooldown period.

Frequently asked questions