What are investment limits?

Investment limits are maximum amounts of certain crypto assets that can be purchased by investors, depending on their investor category. Coinsquare is required to assign each Retail Crypto Investor and Eligible Crypto Investor with an investment limit based on their financial circumstances, as a regulatory requirement imposed by the Canadian Securities Administrators.

For context, “Accredited Crypto Investor” and “Eligible Crypto Investor” have specific meanings ascribed to them based on this OSC decision. “Retail Crypto Investor” means a client that is not an Eligible or Accredited Crypto Investor.

The investment limit represents the maximum amount of all combined crypto assets that an investor can purchase in a 365-day period, except Bitcoin, Bitcoin Cash, Ethereum and Litecoin, which are not subject to investment limits. All investors, regardless of category, can purchase an unlimited amount of Bitcoin, Bitcoin Cash, Ethereum and/or Litecoin. These four assets are referred to collectively as “Specified Assets”.

For all other assets besides Specified Assets, the Investment Limits per 365-day period are:

  • Retail Crypto Investors: $30,000 CAD

  • Eligible Crypto Investors: $100,000 CAD

  • Accredited Crypto Investors: No limit.

Who is affected by Investment Limits?

Clients who are residents of Quebec, Manitoba, Alberta, or British Columbia are exempt from any Investment Limits, regardless of their financial circumstances.

Residents of all other provinces and territories who are determined to be Retail Crypto Investors or Eligible Crypto Investors are subject to the Investment Limits.

How are Investment Limits calculated?

Clients who are subject to Investment Limits will see their remaining limit displayed on their account profile. This limit is calculated using the formula below.

In this formula, “Restricted Asset” means any of the currencies that are not Specified Assets. Fiat means Canadian Dollars (CAD) or US Dollars (USD) but not stablecoins such as USD Coin.

Remaining Investment Limit

=

Investment Limit ($30k or $100k)

-

total CAD value of all purchases and/or open buy orders where a Restricted Asset is acquired by selling a Specified Asset or fiat

+

total CAD value of all sales where a Specified Asset or fiat is acquired by selling a Restricted Asset.

To put it simply, buying Restricted Assets using fiat or Specified Assets reduces your Investment Limit. Selling Restricted Assets for fiat or for Specified Assets increases your Investment Limit room. Trading one Restricted Asset for another Restricted Asset has no effect on your Investment Limit.

When do Investment Limits reset?

Investment Limits for each client consider all transactions that have taken place in the previous 365 day period on a rolling basis. Any transactions conducted before November 12th, 2022 will not be considered in the calculation. Each Coinsquare client will have a full Investment Limit balance on November 12th, regardless of historical transactions.

Investment Limit examples

Case 1:

Alex opens a new account on December 1, 2022 and, as a Retail Crypto Investor, has an Investment Limit of $30,000. They deposit $1000 CAD into their account and immediately purchase $1000 worth of Bitcoin. Since Bitcoin is a Specified Asset and was acquired for fiat, this trade has no effect on Alex’s Investment Limit calculation.

On January 3, 2023, Alex’s Bitcoin has now doubled in value and is worth $2000 CAD. Alex trades their entire bitcoin holdings to ApeCoin. This trade has an effect on Alex’s Investment Limit, since a Restricted Asset (APE) is purchased using a Specified Asset. Following this trade, Alex’s remaining acquisition room is now $28,000, as $2000 of their available Investment Limit is occupied by the APE-BTC transaction.

Two months later, Alex deposits $3000 worth of MATIC into their account. Since deposits and withdrawals are not considered in the Investment Limit calculation, this has no effect on Alex’s remaining acquisition room.

In June 2023, Alex’s MATIC holdings are now worth $5000, and their APE holdings are worth $2000. Alex decides to trade all of their APE to MATIC in a coin-to-coin trade, without converting to CAD first. Since this trade includes the acquisition of a Restricted Asset for another Restricted Asset, it is not considered in the Investment Limit calculation. After this trade, Alex’s remaining acquisition room is still $28,000.

In September 2023, Alex’s MATIC holdings are now worth $8500. Alex deposits $5000 CAD into their account and trades the entirety of that CAD balance to MATIC. Since this trade is an acquisition of a Restricted Asset for fiat, it is considered in the Investment Limit calculation. This trade removes $5000 from Alex’s remaining Investment Limit, reducing his acquisition room to $23,000.

In November 2023, Alex’ MATIC holdings are now worth $15,500. They decide to liquidate $6000 worth of MATIC to CAD. This trade is a sale of Restricted Assets to fiat, which is considered in the Investment Limit calculation, and opens up additional Investment Limit acquisition space. This trade causes Alex’ remaining Investment Limit acquisition room to increase by $6,000 to $29,000 total.

On January 4, 2024, more than 365 days have passed since Alex’ trade where they traded $2000 worth of Bitcoin for ApeCoin. Since this trade occurred more than 365 days ago, it is no longer considered in the Investment Limit calculation. That trade, worth $2000, no longer affects Alex’s remaining acquisition room, therefore their limit is restored to $30,000. It cannot be restored above $30,000 because that is the maximum permitted Investment Limit for a Retail Crypto Investor.

Case 2:

Ash is an existing Coinsquare user, who has had an account since 2020. In November 2022, Coinsquare enabled Investment Limits and required Ash to complete the trading questionnaire. After completing the questionnaire, Ash is told they have an Investment Limit of $100,000. Ash has made numerous purchases throughout the past year, but is relieved to learn that transactions that were executed before November 12, 2022 are not considered in the Investment Limit calculation.

Ash’s account holds $60,000 CAD, which they immediately trade to USDC via Coinsquare’s OTC service in December, 2022. This trade is an acquisition of a Restricted Asset for a fiat asset, which is considered in the Investment Limit calculation. This trade brings Ash’s remaining acquisition room to $40,000.

On January 1, 2023, Ash deposits USDC worth $133,000 CAD to their account. Since deposits and withdrawals are not considered in the Investment Limit calculation, this has no effect on Ash’s remaining acquisition room. At this point in time, Ash has USDC holdings worth $193,000 in their account.

Ash then trades the entirety of their USDC holdings to DOGE. Since this trade involves a Restricted Asset (USDC) being exchanged for another Restricted Asset (DOGE), it is not considered in the Investment Limit calculation. After the trade, Ash has $193,000 worth of Dogecoin, and their remaining acquisition room is still $40,000.

On June 20, 2023, Ash’ Dogecoin holdings have decreased in value to only $33,000. Ash decides to trade the entirety of their Dogecoin holdings to Bitcoin. Since this trade is an acquisition of a Specified Asset in exchange for a Restricted Asset, it is considered in the Investment Limit calculation, and increases available Investment Limit acquisition space. Since Ash’s DOGE-BTC trade had a CAD value of $33,000, and they previously had $40,000 in Investment Limits, their remaining acquisition room is now $73,000.

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