By Ketki Saxena
Investing.com – According to sources familiar with the matter, two of Canada's biggest cryptocurrency exchange operators Coinsquare Ltd. and WonderFi Technologies Inc. are in merger talks to create what will become by far the largest cryptocurrency exchange in Canada.
The talks have reached an advanced stage, with an announcement expected in the next few days. Despite the talks having reached an advanced stage, the sources note that a decision tgo not go ahead with the deal may be decided on at the eleventh hour.
The exact terms of a merger remain undisclosed. However, a likely scenario could see Coinsquare shareholders take a majority stake in the combined business, and control more seats on the board than WonderFi.
WonderFi currently has a market capitalization of about $51 million on Thursday, while Coinsquare has a pre-money valuation between $250 million to $350 million.
Should the deal go through, what will become Canada’s largest cryptocurrency exchange, will have a combined user base of about 1.15 million.
WonderFi has about 650,000 users on its exchange, $258 million worth of assets under management and $45 million in revenue across its BitBuy and Coinberry subsidiaries. Coinsquare has about 500,000 users, but the privately held company does not disclose its assets under management or revenue.
News of the potential deal comes at a time of contagion in crypto markets, following the spectacular bankruptcy and fallout from FTX. Several other crypto operators have recently upped consolidation efforts, including Voyager Digital which sold some of its assets to Binance’s U.S. operations, and Celsius Network, which plans to sell off its assets at auction next month after having filed for bankruptcy.
The source commenting on Coinsquare - WonderFi noted that the potential deal comes at a time of “very high regulatory costs and regulatory capital in the tens of millions of dollars. The smaller exchanges will find themselves forced into consolidation, likely with this new amalgamation” - but notes that it may be the only way for smaller crypto companies to survive the crypto winter.
Late last year, Coinsquare became the first Canadian platform to be registered with the Investment Industry Regulatory Organization (IIROC) in October. Coinsquare’s regulatory status is expected to held it lead consolidations in the Canadian cryptocurrency sector moving forward.