Coinsquare acquires publicly traded crypto exchange CoinSmart

Canada’s crypto exchange landscape appears to be consolidating after Coinsquare, one of the country’s largest digital asset trading platforms, 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 stock of CoinSmart’s wholly owned subsidiary, Simply Digital. Once the deal closes, CoinSmart will hold an approximately 12% stake in Coinsquare on a pro forma basis.

Shares in crypto exchange CoinSmart, which trades on the NEO exchange, surged 67% on Friday, mostly 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 range of services to include retail and institutional commerce, crypto payment processing and digital asset custody.

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CoinSmart was co-founded in 2018 by Justin Hartzman, who also served as the company’s CEO. Post-acquisition, Hartzman will join Coinsquare’s leadership team.

As a public company, CoinSmart publishes its financial statements on a quarterly basis. In its full-year summary released on April 1, the company reported gross sales of $16.7 million in 2021, a 357% increase from the prior year. Retail volume grew by 875%, likely reflecting the Bitcoin (BTC) bull market in 2021.

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Coinsquare is one of only two crypto exchanges operating in Canada to pre-register with their key regulators as they work towards full compliance with securities laws. Established by the Canadian Securities Administrators (CSA), the pre-registration requirements allow crypto exchanges to remain operational while their full applications are reviewed with the CSA.

In an interview with Cointelegraph on the sidelines of the Toronto Futurists conference in August, Eric Richmond, Coinsquare’s chief operating officer, explained that the crypto exchange was registered with the Investment Industry Regulatory Organization of Canada (IIROC) in November 2020.

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Crypto adoption in Canada is increasing, but as in other countries, participation is largely based on underlying market conditions. According to a KPMG survey, adoption is also growing in institutional circles due to crypto’s perceived benefit and potential for innovation.