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Canadian Regulators Green Light World’s First Bitcoin ETF for Retail Investors

Bloomberg Canada | Olivia Raimonde and Claire Ballentine | Feb 12, 2021

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Purpose Investments Inc. said Canadian securities regulators have cleared the launch of the Purpose Bitcoin ETF, making it the first to gain regulatory approval in North America.

The fund is designed to provide investors with exposure to the world’s largest cryptocurrency by investing directly in physically settled Bitcoin, the company said in a statement. 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.

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This isn’t the first time Canada has beat the U.S. in regulatory approval for ETFs. Canadians launched the first ETF ever and also released marijuana-related funds prior to their southern neighbors. Industry participants say this is a positive sign for firms hoping to offer their own ETFs on a U.S. exchange.

“Canada has a long history of approving new types of ETFs before the U.S. And the U.S. has a history of following. Thus, we think this is net net good news for Bitcoin hopes in the U.S.,” said Bloomberg Intelligence ETF analyst Eric Balchunas.

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.

“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.

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Global and Mail | Clare O’Hara | Feb 12, 2021

Bitcoin ETF approved - Canadian Regulators Green Light World's First Bitcoin ETF for Retail InvestorsCanada approves world’s first bitcoin ETF for retail investors

Purpose Investments Inc. has been cleared by regulators to launch the world’s 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.

On Thursday, the Ontario Securities Commission (OSC) gave the green light for Purpose Investments, the asset management arm of Purpose Financial LP, to launch the Purpose Bitcoin ETF on the Toronto Stock Exchange. Under the ticker 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.

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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 months to finalize the launch of the ETF. He said that, since 2017, regulators have become more comfortable with the asset class as institutional investors have adopted cryptocurrencies more widely and there is more infrastructure to support the asset.

“There is a greater recognition that this is an asset class that investors are drawn to whether the regulators like it or not,“ Mr. Seif said. “I think the 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.”

In recent weeks, several ETF providers filed a preliminary prospectus with the OSC in hopes of being the first to market. Horizons ETFs Management (Canada) Inc., Evolve Funds, Accelerate Financial Technologies Inc. and newcomer Arxnovum Investments Inc. have all publicly applied with regulators to list a bitcoin ETF that would also trade on the Toronto Stock Exchange.

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In the United States, more than 10 investment companies have filed with the Securities and Exchange Commission (SEC) for similar products. Last month, U.S. President Joe Biden appointed a new SEC chair, prompting hopes that a bitcoin ETF could be approved in 2021.

The OSC’s approval of BTCC could nudge other markets to see similar products come to light.

“The SEC will definitely feel the pressure to allow such a product to come to the marketplace because there are already products in the market that are taking advantage of the exposure of bitcoin that are not efficient for investors and are not being done in a regulated format like the SEC would want,” Mr. Seif said.

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