Overview

Decentralized exchange (DEX) trading lets you buy and sell thousands of crypto assets directly on a DEX from within the Wealthsimple app. This gives you access to a much wider selection of tokens than what's currently available on our platform.

Your current Wealthsimple Crypto account is custodial, which means Wealthsimple holds and secures the crypto in trust on your behalf, and those assets are covered by insurance from our custodial partners. DEX trading is different. When you make your first DEX trade, Wealthsimple creates a self-custody wallet for you. This means:

• Access to more tokens: You get access to the full on-chain market on supported networks, not just Wealthsimple's curated list of assets.
• No insurance coverage: Assets held in your self-custody DEX wallet aren't covered by insurance, and don't share the same regulatory oversight as our custodial crypto offerings. There's no government-backed insurance coverage for losses related to wallet access or blockchain transactions.

Think of it as the best of both worlds: The curated experience you've come to expect from Wealthsimple and the full breadth of on-chain trading. You get both in one app.

How to get started with DEX trading

To start trading on a DEX, you'll first need an existing Crypto account with Wealthsimple. From there, you can follow these steps:

1. Log in to the Wealthsimple app
2. Find a DEX asset by searching for it in the Discover tab. DEX-eligible tokens will be labelled accordingly
3. When you make your first DEX trade, Wealthsimple creates a new self-custody wallet to hold your DEX assets
4. You'll be asked to accept the terms and conditions before your new wallet is created
5. Once your wallet is set up, you can buy and sell DEX tokens directly in the app

How it works

When you place a buy order for a DEX token, your crypto is converted to the necessary currency to pay for the asset and any fees. A third-party DEX aggregator then scans the blockchain to find the best available price, and the trade is executed on a DEX. The asset then appears in your DEX wallet.

When you sell a DEX asset, it leaves your wallet and is sold on the DEX. The proceeds will appear in your custodial Crypto account as a cash balance once the trade settles.

Your DEX assets will always be held separately in your Crypto wallet and separate from your custodial Crypto assets.

How a DEX trade actually executes

Here's what happens when you buy:

1. Your Crypto is converted into USDC and is withdrawn to your self-custody Crypto wallet to pay for the DEX asset and any applicable fees.
2. A third-party DEX aggregator scans the blockchain to find the best available price.
3. The trade executes on a DEX, and the asset lands in your DEX wallet.

Here's what happens when you sell:

1. The assets are swapped from your DEX wallet.
2. The proceeds are converted to USDC and transferred into your custodial Crypto account.

Understanding slippage

Slippage is the difference between the price you expect when you place a trade and the price at which the trade actually executes. This can happen because rypto prices move quickly and DEX trades are executed on-chain, where market conditions can shift between the time you confirm a trade and the time it settles.

A few things to keep in mind:

• Tokens with low liquidity are more susceptible to slippage, as there may not be enough volume at your expected price to fill the full order.
• Periods of high volatility can cause prices to move significantly in a short time.
• Slippage tolerance: During the beta, a fixed maximum slippage tolerance of 2% is applied automatically. If the price moves beyond 2% from your expected execution price, the trade won't go through. This protects you from executing at an unfavourable price.

Slippage is a normal part of on-chain trading and isn't unique to Wealthsimple. Always review the estimated execution price and fee breakdown before confirming your trade.

Fees

You'll see a full fee breakdown before you confirm any trade.

Volume-based fee

DEX trading uses a similar fee structure to your custodial Crypto account. Your DEX trading fee is based on your client tier and your 30-day rolling trading volume from your custodial Crypto account — you'll always be charged whichever is lower between your baseline fee and your volume-based fee.

Third-party vendor fees may also apply to DEX trade transactions and will be passed through at cost without markup. All applicable fees, including any vendor charges, will be presented during the order flow prior to a transaction being processed.

Baseline trading fees by tier

Volume-based trading fee

Volume-based rates may apply if you've traded above certain thresholds in the past 30 days, dropping as low as 0.05% for high-volume traders.

Safety and risk

DEX assets haven't gone through Wealthsimple's custodial listing process, so it's important to do your own research before trading. Before you trade any DEX asset, its asset page shows risk flags to help you make a more informed decision. Tokens flagged as malicious by our third-party vendor are automatically filtered out, but these flags aren't exhaustive. Always do your own research.

Flag risks

Security

Your DEX wallet is provisioned automatically within the Wealthsimple app using secure, encrypted key management, and no manual setup is required. Your wallet credentials are protected by device-based authentication and Wealthsimple's security infrastructure.

How to protect yourself when using DEX trading

The DEX ecosystem carries unique risks that don't exist in your Wealthsimple custodial account. Here's how to stay safe:

• Verify before you confirm. Always review the asset, amount, and network before completing any transaction. Blockchain transactions cannot be reversed.
• Research tokens before trading. DEX tokens haven't been reviewed by Wealthsimple. Review any risk signals and do your own research. If something looks too good to be true, it probably is.
• Guard your account access. Your DEX wallet is tied to your Wealthsimple profile. Keep your login credentials and two-factor authentication secure.

Purchase limits and loss limits

Do purchase limits apply to DEX trading?

No. The crypto purchase limit, which restricts most custodial crypto purchases to a combined $30,000 net per 12-month period, doesn't apply to DEX trading. This limit is a regulatory requirement tied to your custodial Crypto account. Since DEX trades are executed from your self-custody wallet outside of that infrastructure, they aren't subject to it.

Do loss limits apply to DEX trading?

No. Loss limits, which are assigned to your custodial Crypto account based on your financial profile and risk tolerance, don't apply to DEX trading. Loss limits are a CSA regulatory requirement tied to your custodial account, and DEX trades occur in your self-custody wallet outside of that framework.

This also means that losses incurred through DEX trading won't count toward your custodial account's loss limit calculation, and a DEX loss won't trigger a cooldown on your ability to buy assets in your custodial account.

Tax reporting

Are DEX trades taxable?

Yes, every DEX trade is a taxable event, just like trading listed Crypto. When you buy or sell a DEX token, you may realize a capital gain or loss that needs to be reported on your income tax return. This applies whether you profit or lose on the trade; any disposition of a cryptocurrency triggers a reporting obligation under Canadian tax rules.

Will Wealthsimple provide a Realized Gains and Losses report for my DEX trades?

No. Unlike your custodial Crypto account, DEX trades aren't eligible for a Realized Gains and Losses report. This is because DEX trades are executed outside of Wealthsimple's custodial infrastructure, so Wealthsimple doesn't have full visibility into the on-chain transactions needed to generate this report.

For your custodial Crypto account, you can still access your Realized Gains and Losses report and Crypto Transaction Summary as usual. These will reflect the USDC (or other crypto) that was withdrawn from your custodial account to fund a DEX trade, and the proceeds deposited back when you sold.

How do DEX trades appear in my custodial account for tax purposes?

When you make a DEX trade, two events occur that are visible in your custodial Crypto account:

• When you buy a DEX token: The funding crypto (for example, USDC) is withdrawn from your custodial account. This withdrawal will appear in your Crypto Transaction Summary.
• When you sell a DEX token: The proceeds are deposited into your custodial Crypto account as USDC. This deposit will also appear in your Crypto Transaction Summary.

The swap itself (the on-chain exchange between the funding crypto and the DEX token) occurs within your self-custody wallet and won't appear in your Wealthsimple tax documents.

How should I track my DEX trades for tax purposes?

Since Wealthsimple doesn't provide a Realized Gains and Losses report for DEX trades, you're responsible for tracking your own DEX transaction history. To calculate your capital gains or losses, you'll need to record:

• The date of each trade
• The token bought or sold
• The amount and cost in CAD at the time of the trade (adjusted cost base)
• The proceeds in CAD at the time of the sale

You can view your on-chain transaction history using a blockchain explorer (for example, Etherscan for Ethereum), or use a third-party crypto tax tool that supports wallet imports.

We recommend keeping detailed records of all your DEX transactions and consulting a tax professional if you're unsure how to report them.

Closing your account

Before closing your custodial Crypto account, you'll need to sell any DEX assets you hold. Unlike listed crypto, DEX assets cannot be transferred to an external wallet during early release, so it's important to sell them first.

Here's what to do before closing your account:

1. Sell all DEX assets. Go to each DEX token you hold and place a sell order. Proceeds will be deposited into your Crypto account once the trade settles.
2. Confirm your DEX wallet is empty. Check your holdings to make sure no DEX assets remain.
3. Proceed with account closure. Once your DEX wallet is clear, you can close your Crypto account through the normal process.

If you close your account with DEX assets still in your wallet, you may lose access to those assets. Our support team isn't able to recover assets from a closed account.

Frequently asked questions

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