Canada approves world’s first  bitcoin ETF for retail investors

Purpose Investments Inc. has been cleared by regulators to launch the world’s for first bitcoin exchange traded fund, opening the door for retail investors to more easily access a cryptocurrency that had been stalled by regulators for years.

The Ontario security commission (OSC) gave the green light for Purpose Investments, the asset management arm of Purpose Financial LP, to launch the purpose of Bitcoin ETF on the Toronto stock Exchange. Under the tickets BTCC , the fund will begin to trade on Feb.18 and invest directly in bitcoin, allowing retail investors to access the cryptocurrency without the need for a digital wallet.

Purpose Financial Chief executive officer Som seif, an ETF veteran , says he and his team had private discussions with the OSC over the past eight month finalize the launch of the ETF. He said that, since 2017, regulators have become more comfortable with asset class as the institutional investors have adopted cryptocurrency more widely and there is more infrastructure to support the asset.

“There is a great recognition that this is an asset class that investors are drawn to whether the regulators like it or not , ” Mr.Seif said. “I think regulators now recognize that creating an efficient, regulated structure is a much better outcome for investors’ protection than some of the things we have seen in recent years that went unregulated, were either outright fraudulent or left investors paying egregious fees.”

Bitcoin is a digital currency that is not backed by any country’s central bank. Launched in 2009, the cryptocurrency spiked in popularity in 2017 after reaching US$20,000 before plummeting more than 85% in 2018.

A revival brought prices to a new all-time high of US$40,000 at the start of 2021. But the digital currency is known to be highly volatile, with price swings of more than 30 per cent is one day.

Until now, asset managers could give retail investors only closed- ended bitcoin funds- an investment that typically trades with large premiums, in some cases as much as 40 per cent.

During the bitcoin craze of 2017 and 218, Canadian and US ETF companies went head-to- head trying to launch North America’s first bitcoin ETF.

BTCC has a 1 per cent management free, and will invest in the physical from of bitcoin rather than futures that would allow investors to speculate on the price at later date. The fund will track the TradeBlock XBX Index, which uses an algorithm to calculate the consolidated price of bitcoin every second.