OSC approves Canada’s first blockchain ETF

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The Globe and Mail | | Feb 1, 2018

As the price of bitcoin continues to tumble, exchange-traded fund providers are looking to the underlying blockchain for value as two more providers file plans with regulators to join the sector while Harvest Portfolios gets the green light to launch Canada's first blockchain ETF.

Last month, Harvest Portfolios filed a preliminary prospectus with regulators to introduce an ETF that tracks blockchain technologies. Earlier today, the firm received approval by the Ontario Securities Commission to launch the country's first blockchain fund – Blockchain Technologies ETF. With the ticker HBLK, the fund has a management fee of 0.65 per cent and seeks to replicate the performance of the Harvest Blockchain Technologies Index; an index designed in-house to track the performance of issuers in both the large-cap blockchain segment and the emerging blockchain segment exposed to the development and implementation of blockchain technologies in North America.

The fund will begin trading next week on the Toronto Stock Exchange.

At the same time, two other providers are looking to access the ever-growing popular blockchain technology.

Blockchain is an online digital ledger that keeps a record of recent transactions. Once a transaction is completed, it goes into a blockchain database and is kept as a permanent secure record. It is most commonly known as the technology behind the function of the booming cryptocurrency bitcoin – which soared above US$18,000 in December.

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Both First Trust Portfolios Canada and Evolve Funds Group Inc. have filed preliminary prospectuses with regulators this week for blockchain funds.

First Trust is looking to launch the First Trust Indxx Innovative Transaction & Process ETF, which will aim to replicate the performance of the Indxx blockchain Index. With the ticker BLCK, it is the second fund provider to file an index fund with regulators in Canada and, if approved, will have a management fee of 0.80 per cent.

"Every conversation we are having with clients – regardless if we are talking about a Canadian equities product or a U.S equity product – inevitability leads to [a discussion about] blockchain or bitcoin," says Karl Cheong, head of ETFS for First Trust Portfolios Canada. "The commentary out there right now is that blockchain is the more viable option while bitcoin may not have as many legs in terms of viability; but bitcoin could be the Friendster before the Facebook shows up in the crypotocurrency space. The concept of blockchain is very attractive to investors right now, and while the idea is still very novel, the research shows that this is a technology that could potentially save billions of dollars in cost, and that is very attractive."

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The National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit: ncfacanada.org

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