As a CoinSmart customer, the maximum amount of total Crypto Assets combined (excluding BTC, ETH, BCH, and LTC) you may purchase and sell (net acquisition cost) in a rolling 12 month period cannot exceed $30,000 CAD.
Let’s take a look at some hypothetical examples to understand how these limits work:
- You buy $30,000 worth of ADA, XLM, and DOGE putting your buy limit to $0.
- The market triples and now your portfolio is worth $90,000.
- Now, if you decide to sell $30,000 worth of crypto, it will reset your buy limit back to $30,000.
Why? Because at the point of buying, you purchased $30,000 crypto and at the point of sale, you sold $30,000 crypto. Both managed to cancel each other out.
- You buy ADA worth $30,000
- Market drops and now your ADA is worth $15,000
- You sell off all your ADA and your buying limit only goes up to $15,000.
Why? At the point of buying, you purchased $30,000 of ADA. At the point of selling, you sold the same amount of ADA tokens. However, because of devaluation, they are now worth $15,000. 30,000-15,000 = $15,000 -> your new buying limit.
- You buy XLM worth $30,000.
- Market skyrockets, and let’s say your XLM is now worth $60,000.
- You decide to sell all of your XLM. Even then, your buy limit will still reset to $30,000.
Why? The buy limit has a hard upper limit of $30,000
- You buy DOGE worth $30,000.
- Let’s say Dogecoin crashes horribly, and the market goes to $0.
- However, you will still not be able to buy any crypto (except BTC, ETH, BCH, and LTC)
Why? Since you have already touched your buy limit of $30,000.
- You buy $15,000 of ADA (Meaning you still have a $15,000 buying limit left)
- ADA drops to $10,000 and you decide to sell them off.
- Your new buying limit is $25,000.
Why? You sold off your portfolio for $10,000 and added it to the $15,000 leftover, giving you a $25,000 buy limit.
What is the significance of this step?
Crypto assets are known to be volatile. The buying limit manages our client’s risk exposure.