According to a decision report published Thursday, Canada’s securities regulator just approved the first publicly traded bitcoin ETF in North America.
The Bitcoin ETF filed the receipt of approval from the Ontario Securities Commission (OSC) under a Multilateral Instrument passport system in multiple Canadian jurisdictions. Those territories include Prince Edward Island, British Columbia, Alberta, Northwest Territories, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Yukon, and Nunavut.
What the Bitcoin ETF Aims At
While the Toronto Stock Exchange lists many close-ended Bitcoin funds, such as those listed by Canadian investment manager 3iQ, they are different from ETFs. In an ETF, units are issued continuously, whereas closed-ended funds only give companies when they are first offered to the public and in reopenings.
The Purpose Bitcoin ETF will try to replicate the Bitcoin price yield minus the ETF fees and expenses according to a fact sheet published by Canadian asset manager Purpose Investments. It will trade on the Toronto Stock Exchange as a “BTCC” ticket.
The company prospectus reads that the fund is designed to buy and hold all of its assets in long-term Bitcoin holdings essentially and seeks to give ETF shareholders long-term capital appreciation.
ETF risks are based on the nature of the underlying asset, and Bitcoin ETFs are classified as “high risk”. Anyone looking for a stable source of income for investment should not buy from these funds.
The fund’s fees consist of a management fee and operating and trading costs, while the annual administration fee currently amounts to 1% of the value of Bitcoin. The funds are still so new that their operating and trading costs have not been allocated.
SEC Could be a Step Closer to Approving a US Bitcoin ETF
The ETF announcement provides hope that the US Securities and Exchange Commission will be one step closer to approving the US Bitcoin ETF. Several companies have filed for and failed to get approval for Bitcoin ETFs in the past, with the SEC usually citing security concerns.
Sui Chung, CFO CF of Benchmarks, told Insider that this is another step in ETF approval in the US.
While Canada’s Bitcoin ETF is a significant advance that shows how North American regulators are more familiar with the crypto landscape, it’s unclear how fast the United States will catch up, especially given the differences between Canadian and US financial regulations, Chung added.
Despite resistance by the SEC, demand for bitcoin-based investments surged during the Bitcoin 2021 rally. The Grayscale Bitcoin Trust, which replaced Bitcoin, has gained 272% over the past twelve months. Countries like Sweden approved ETFs back in 2016 and have made significant profits over the years. For every 1 ETF traded in the U.S. markets, Sweden ETF gathers total assets under management of $438.19M.
The Toronto Stock Exchange is expected to issue funds in Canadian dollars. Purpose Investment manages its portfolio and funds.