Coinsquare Acquires Publicly Traded Crypto Exchange CoinSmart

Canada’s cryptocurrency exchange landscape appears to be consolidating after Coinsquare, one of the largest digital asset trading platforms in the country, acquired CoinSmart for an undisclosed sum.

On Thursday, Coinsquare announced that it had entered into a definitive agreement to purchase all of the issued and outstanding shares of CoinSmart’s wholly-owned subsidiary Simply Digital. Once the deal is finalized, CoinSmart will hold an approximately 12% ownership stake in Coinsquare on a pro-forma basis.

Shares of crypto exchange CoinSmart, which trades on the NEO Exchange, surged 67% on Friday, largely 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 service offerings to include retail and institutional transactions, crypto payment processing and digital asset custody.

CoinSmart was co-founded in 2018 by Justin Hartzman, who also served as the company’s CEO. Following the acquisition, Hartzman is set to join Coinsquare’s executive team.

As a publicly traded company, CoinSmart discloses its financial statements quarterly. In its annual summary released on April 1, the company reported gross revenue of $16.7 million in 2021, up 357% year over year. Retail trading volume increased by 875%, likely reflecting the 2021 Bitcoin (BTC) bull market.

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Coinsquare is one of only two crypto exchanges operating in Canada to pre-register with their major regulators as they work towards full compliance with securities laws. The pre-registration requirements were set by the Canadian Securities Administrators, or CSA, and allow crypto exchanges to remain operational while their full applications with the CSA are being reviewed.

In an interview with Cointelegraph on the sidelines of the Futurist conference in Toronto in August, Coinsquare CEO Eric Richmond explained that the crypto exchange registered with the Investment Industry Organization of Canada, or IROC, in November 2020.

Crypto adoption in Canada is on the rise, but as in other countries, participation is highly dependent on underlying market conditions. According to KPMG research, adoption is also increasing in institutional circles due to the upside and innovative potential of crypto.