For years now Bitcoin enthusiasts have been clamoring to see the first North American Bitcoin exchange-traded-fund (ETF) approved. While regulators in the United States still drag their feet, Canada has delivered back to back approvals in the span of days.
Canadian Exchange Traded Funds (ETFs)
It is no surprise that a Bitcoin ETF was first approved in Canada. The nation has provided access for a while now to a similar product known as ‘The Bitcoin Fund’. Brought to market by 3iQ, this is a ‘close-ended fund’, which functions similar to an ETF – the main difference being that a CEF is actively managed, resulting in higher fees and lower transparency.
The following are the two ETF approved by the Canadian regulators this past week.
Evolve Funds Group
In its application the company provided the following description for EBIT.
“EBIT intends to invest in bitcoin on a passive basis, the Fund's holdings will not be actively managed and accordingly, will not be hedged or repositioned to attempt to take defensive positions if the price of bitcoin declines or is expected to decline. The Fund will not speculate with regard to short-term changes in bitcoin prices. EBIT will not use leverage and does not intend to pay regular cash distributions.”
Interestingly, it would appear as though this particular ETF was approved within a very short time-period. From the time of application to approval, only three weeks had elapsed. With Canadian regulators working at such a feverish pace, it should not be much longer before we see other applications approved as well.
Last week, it was Purpose Investments which saw its Bitcoin ETF application first approved. Touted as ‘the first direct custody Bitcoin ETF in the world’, this product will soon be accessible through the Toronto Stock Exchange. The company recently elaborated on this, stating,
“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 without the associated risk of self-custody within a digital wallet. Similar to physically backed gold or silver products, the ETF will always be backed directly by physically settled Bitcoin holdings.”
Although there are a long line of Bitcoin ETF application which have been assessed and discarded in the United States, there are a few companies determined to see such a product approved. The most recent of which is the New York Digital Investment Group (NYDIG). In this case, NYDIG outlines a product which would notable see investment firm, Morgan Stanley, act as the ‘initial authorized participant’. Despite this filing, and its attachment to other notable companies, it would be surprising if the SEC gave its approval in a time frame similar to its northern counterparts.
Moving forward, there are various other applications currently under evaluation by regulators in North America. In addition to the aforementioned application by NYDIG, there are those from Accelerate, and Arxnovum.