As a regulated platform, Wealthsimple is required to collect information to determine your risk profile and evaluate your understanding of the risks associated with trading cryptocurrency assets.

To achieve this, we will inquire about your previous investment experience, your tolerance for risk, and your current financial status. Should your responses indicate that your risk tolerance does not 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 limit notifications are designed to provide warnings to clients holding crypto that have experienced significant realized or unrealized losses. Each client will have their own unique loss limit based on the information we collect from you.

If the realized or unrealized loss in your account approaches or exceeds your loss limit, we will notify you by email about your account’s performance. This is to help ensure that you are aware that there have been losses within your account. While we can’t give you investment advice, we want you to know how your account is performing, and to consider whether your crypto investments are still in line with your financial goals.

Why do we have loss limits?

We are required under securities legislation to know your client. However, more specifically, we are required to collect certain information about our clients’ financial circumstances, experience in trading and risk tolerance under the terms and conditions with the Canadian Securities Administrators which permit us to operate Wealthsimple Crypto. These requirements can be reviewed on the Ontario Securities Commission website. These terms and conditions also require us to apply a client limit (or “loss limit”) to each client based on the information we collect. Loss limits are a regulatory requirement that provides precautions to clients on Wealthsimple Crypto that have experienced significant realized or unrealized losses.

How are loss limits calculated?

Both new and existing Crypto clients are required to provide the necessary information that allows us to understand their risk profile and support in the calculation of their Crypto loss limits.

• For new clients, the risk survey is part of the Crypto account opening process.
• For existing clients, you will be prompted to review and update (as necessary) your information on an at least annual basis.

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

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

When calculating losses to determine if you are 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 your buy or deposit an asset.

Cooldown period

If you exceed your loss limit and continue to trade and incur loss (realized or unrealized) in your Crypto account, your Crypto account may be subject to an account cooldown. During the cooldown period, clients are restricted from purchasing additional crypto assets.

However, clients are still permitted to sell existing positions in crypto assets, stake applicable assets and withdraw their crypto assets. Clients will not be able to purchase any new crypto assets for 30 days.

Frequently asked questions

What happens if I don't provide the requested information?

If clients do not provide the necessary information to apply a loss limit, they may not be able to open a new crypto account or continue trading on their existing account, as this information is necessary to determine their risk profile and assign a loss limit.

What if I don't want to be assigned a loss limit?

Assigning a loss limit is a requirement under securities legislation, and Wealthsimple is obligated to comply with these regulations. Clients who do not wish to have a loss limit may need to reconsider their participation in trading cryptocurrency on the platform.

Can my loss limit be reevaluated?

Loss limits are assigned when clients provide us with the necessary information and we’ll ask you to verify that the information we have on file continues to be accurate on an annual basis. As a result, loss limits will only be reevaluated during this time. For illustrative purposes, if a client is assigned a loss limit on January 1, 2024, their reassessment won't be until January 1, 2025.

However, if you believe we have incorrect information please contact our help centre for assistance.