Robinhood Acquires WonderFi: Expanding Crypto Reach in Canada
Aiming to grow its crypto operations worldwide, Robinhood shared the news of purchasing a Canadian crypto trading platform, WonderFi, in an all-cash deal of about $179 million (C$250 million). By acquiring WonderFi, they are entering the Canadian market for the first time.
In the deal, WonderFi was valued at 36 Canadian cents per share, which is 41% more than the recent trading price of WonderFi. There will be cash consideration for shareholders so that there’s no dilution in Robinhood’s current equity structure.
WonderFi was founded in 2021 and has quickly become one of Canada's largest crypto trading ecosystems. WonderFi owns the two biggest Canadian platforms, Bitbuy and Coinsquare, with over 1.6 million users. Last year alone, WonderFi reported over C$3.6 billion in trading volume, a yearly increase of 28%.
The leadership team at Robinhood is very satisfied with the deal so far. Their General Manager, Johann Kerbrat even went ahead to say that WonderFi is an ideal partner for the company’s expansion plans. There is truth in his words as WonderFi already has strong compliance with Canadian regulations and focuses on all types of users, beginners and advanced. With WonderFi’s amazing infrastructure and licenses in place, it will be easy for Robinhood to enter the Canadian market.
Robinhood always wanted to make it easier for people to get into financial markets, and the Robinhood WonderFi acquisition will be a great help for that. Before this, the company bought Bitstamp, another crypto exchange located in the EU, in 2024, and also started offering its services in the UK in 2023.
Mizuho Securities thinks that the Robinhood WonderFi deal might bring in about $250 million more per year over the medium term. This is roughly a 10% increase in Robinhood's 2024 profits. To make this estimation, they have used the Canadian user penetration data and also assumed that there will be conservative growth. The conservative growth could be $75 annual revenue per Canadian account.
The timing of the Robinhood WonderFi acquisition is perfect as crypto markets are showing signs of revival after a long period of downturn, and there’s increasing investor interest and trading volumes. Both companies are in a great position to benefit from increased adoption and positive macro trends.
Robinhood plans to keep WonderFi's staff and leaders, making sure that all work goes on as normal during the takeover. The CEO of WonderFi showed excitement about the deal, saying it would improve product offerings and result in faster innovation.
A major advantage of the Robinhood WonderFi acquisition is leveraging WonderFi’s expertise with Canadian rules. Canada has a very organized but tough crypto climate, and outsider companies have lots of problems setting up there. By buying a native, fully compliant with rules firm, Robinhood can skip those problems.
The registered platforms of WonderFi are already compliant with Canadian regulations. This merger will make all these 1.6 million users available to Robinhood, which is an immeasurable head start for any company.
Due to the Robinhood WonderFi acquisition, the company is now in direct competition with other major Canadian crypto companies. Because Robinhood has brands like Bitbuy and Coinsquare, it can provide all types of services to the Canadian users. This includes trading, staking and even educating new investors about crypto. Robinhood is now trying to grow out of the image of a trading app and wants to become an all-inclusive financial services platform.
So in conclusion, the Robinhood WonderFi acquisition is an amazing deal that will give Robinhood entry into the Canadian market. WonderFi is a local brand that has already solved the rules and regulations problem. With time, we will know whether this deal was ideal for the Web3 world or not.
