Canadian Group-Retirement Savings Company Adds Bitcoin and Ethereum to its Plan
Wealthsimple Work CEO called crypto “a new and emerging distributed store of value” with “a strong investment-appreciation thesis.”
The company said it believes it is the first group retirement fund in the country to allow employees to invest in cryptocurrency.
“We’re seeing a massive wave of interest from Canadians in investing in cryptocurrency, and we’ve seen millions of Canadians transact in cryptocurrency,” said Tim Kalimov, the head of Wealthsimple Work, in an interview.
About 28% of Canadians have crypto in their investment portfolio, according to an August survey from fintech company Hardbacon.
This means the employees of companies with retirement plans run by Wealthsimple Work will now be able to allocate between 1% to 3% of their holdings into crypto exchange-traded funds (ETF).
The ETF’s accessibility is a significant factor in their appeal to investors because, in this form, they can be put into a registered account, RRSP, or a TFSA.
The plans will automatically rebalance to keep bonds, stocks, and the crypto portion of their portfolios at their targeted levels.
“It’s clearly a part of the cultural conversation.”
“There is a potential that cryptocurrencies and the blockchain technology that underpins them are really transformational, and that’s where the excitement in the market is coming from.”
Emerging Distributed Store Of Value
Wealthsimple has more than 2 million users, and as per the company's website, it manages group retirement plans for hundreds of companies.
Besides luring in more companies to sign up with them by differentiating its offerings from other financial services providers, Wealthsimple also aims to attract younger employees to contribute to their plans, who are less interested in saving for retirement but are enthusiastic about digital assets.
According to a February 2020 survey by Scotiabank, only one in five millennial Canadians feel they’re on track to meet their retirement goals, and only half of the 32% of those not saving for retirement are between the age of 18 and 35.
“When you’re young, that’s the best time to start saving for retirement.”
“So getting those folks invested is really critical.”
This May, Wealthsimple raised CAD 750 million ($609 million) in a funding round at a valuation of CAD 4 billion, over three times the valuation just seven months earlier.
Commenting on cryptocurrencies, Chief Investment Officer Ben Reeves said they represent a unique asset class to which employees may want exposure in their retirement plans.
“A bet on cryptocurrency is a bet that this is a framework that’s going to be used for the next generation of companies, that it’s a new and emerging distributed store of value, and there’s a strong investment-appreciation thesis for it,” Reeves said, noting that he isn’t necessarily endorsing that view.
“Whereas a currency is more going to be a zero-sum game used as a pretty well-established store of value and means of exchange.”