Canada Authorizes World's First Bitcoin ETF

Canada’s main securities regulator, the Ontario Securities Commission, has cleared the launch of the world’s first bitcoin exchange-traded fund (ETF).

The Purpose Bitcoin ETF will provide investors greater access to the cryptocurrency that has sparked an explosion in trading interest.

“The ETF will be the first in the world to invest directly in physically settled Bitcoin, not derivatives, allowing investors easy and efficient access to the emerging asset class of cryptocurrency,” Purpose Investments said to Reuters.

Investors have been able to trade bitcoin using futures contracts on the CME derivatives exchange. They can also buy closed-end investment funds, such as the Bitcoin Fund on the Toronto Stock Exchange.

An ETF could offer some advantages to investors, such as lower fees.

Bitcoin has gained about 63% so far this year and soared roughly 1,130% since mid-March 2020.

In the United States, eight firms have tried without success since 2013 to create a bitcoin ETF, according to Todd Rosenbluth, director of ETF and mutual fund research at New York-based CFRA, Reuters reported.

Among the issues that Securities and Exchange Commission appears to be focused on are the potential for market manipulation and the process of custody audits that verify that a fund holds its purported assets.

While this is set to be the first investment vehicle for Bitcoin that’s officially labeled an exchange-traded fund, Europe boasts several “physically backed” Bitcoin exchange-traded products that effectively function just like an ETF, Bloomberg wrote.

There are currently at least four active filings for a Bitcoin ETF in Canada yet to be approved, according to data compiled by Bloomberg. The companies that have filed since the start of the year are Evolve Funds, Horizons ETFs, Accelerate Financial and Arxnovum Investments.

In the U.S., VanEck Associates Corp. and Bitwise Asset Management have pending ETF filings. Ongoing hurdles to U.S. approval include its infamous price swings whipsawing unsuspecting retail investors and allegations of industry manipulation.

“We are excited by this development for the entire industry, but more importantly for investors who would like regulated and transparent exposure to this new asset class,” said Matt Hougan, chief investment officer of Bitwise Asset Management. “We look forward to the day when the United States regulatory environment has evolved to a state where Bitcoin ETFs can be issued here as well.”

Sources

Canadian regulator clears launch of world's first bitcoin ETF - investment manager

Sources

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