Alberta government has approved Tetra Trust Co., a Calgary-based fintech startup, to provide cryptocurrency custodian services. The firm has become the first regulated cryptocurrency assets custodian in Canada.
Initially, Canadian crypto assets investors relied on American platforms such as Gemini and Coinbase to store their digital assets. Gemini is based in New York, but Canadians have access to their assets remotely. Gemini is a qualified custodian and has been approved to holds clients’ funds and securities.
Tetra Trust Co. was given a greenlight by Albertan’s Ministry of Finance this week to launch its digital wallet. Using Tetra services will be most preferable by Canadian investors since its operations domesticated to local standards of storing digital assets.
Eric Richmond, the head of Tetra and also a chief operating officer of Coinsquare, adds that using Tetra services will be more secure compared to other large custodians like Gemini or BitGo. Investor’s assets will be protected by Canadian law.
Tetra obtained a license to hold digital assets on 5th July and has already closed multiple financings of undisclosed amounts. The firm is backed by Coinbase Ventures, Mogo Inc, Caldwell, Growth Opportunities Urbana Corp.
Tetra approval comes at a time when governments and regulators are figuring ways to effectively regulate the cryptocurrency industry, often flooded by young and inexperienced investors.
In Canada, the main fear of crypto custodian dates back to 2018. Thousands of investors lost more than $250 million after the death of QuadrigaCX founder Gerald Cotton. Investors’ assets were stored in a cold wallet only be accessible through Mr. Cotton’s laptop.
The Tetra model will be fee-based, and clients using their wallets will need to store at least $1 million worth of crypto. Mr. Richmond has not yet disclosed the fee range. Tetra targets mutual funds, stock exchanges clients, and family offices as potential clients.
For Tetra to succeed, it must convince large mutual funds to use its services instead of entities like Gemini. Its first target client is expected to be Coinsquare, which uses Coinbase services.
Tetra is not the only emerging crypto custody in Canada. Ottawa-based Brane Capital is also seeking custodian status. The fintech company has also announced that it would be listing on Toronto Stock Exchange this fall.
Richmond estimates that the current crypto custodial services are in tens of billions. Tetra aims to bring more than $1 billion in assets under its management by the end of 2021.