Canada Launches First Bitcoin ETF: Is the US Far Behind?

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In Brief
  • The Canadian government authorized North America's first bitcoin ETF.

  • Purpose Bitcoin Fund will be traded on the Toronto exchange.

  • US bitcoin ETFs might follow; Valkyrie Fund has an application with the SEC.

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Canada’s Purpose Investments launched its bitcoin exchange traded fund on Feb. 11, according to its website.



The Purpose Bitcoin ETF, which the Canadian government approved, becomes the first crypto exchange traded fund (ETF) in North America. CAD and USD versions will trade on the Toronto Stock Exchange under the tickers BTCC and BTCC.U respectively.

According to the prospectus, the ETF will be audited by Big Four advisory Ernst and Young. Cidel Trust will handle custodian chores in Canada, while Gemini Trust Company, which is owned by Tyler and Cameron Winklevoss, is the sub-trustee for non-Canadian holdings.



Canadian Connection to Gemini

Gemini Trust is more than just a big name partner for Purpose Investments. The Winklevoss twins were among the first in the US to apply for a bitcoin ETF back in 2017. Their interest in institutional investment vehicles as well as the October 2020 integration of US tax calculation applications to their platform positions the company well as a sub-custodian in this case.

The Securities and Exchange Commission (SEC) denied the Gemini Trust bitcoin ETF application due to the immaturity of the bitcoin market at the time. However, the Winklevoss twins claim that they are still interested in pursuing this direction.

Canada Now; US Next?

Canada can now claim this first in bitcoin history for North America. In the US, Gemini is not alone in trying to gain SEC approval for an ETF.

On Jan. 22, Valkyrie Fund filed an application with the SEC to establish an ETF. VanEck also dusted off its plans for a bitcoin ETF, which had been formally withdrawn in 2019.

Hope for Change

The change in the US after the presidential election brings some hope for the cryptocurrency community and professional investors. The latter entering the market in 2020 made the current bitcoin bull run possible.

Thus far, institutional investors attempting to gain exposure to cryptocurrency do so through investment companies such as Grayscale. As a result, Grayscale Bitcoin Fund has been a huge success. 

The ability to hold exposure and trade on North American markets was not possible in the US until Thursday. However, investors dealing on American markets are still stuck waiting.

The Yellen Era

Will the new Chair of the SEC, Janet Yellen, move the commission’s stance on crypto? She has given mixed messages since her tenure as head of the US Treasury Department. Two issues will show the direction of the SEC in the Yellen era. These are how the SEC handles the Ripple Labs case. The SEC, under former-Secretary Mnuchin, charged Ripple and two of its CEOs with selling unregistered securities.

The other issue? ETFs. If Yellen makes a change regarding ETFs, then the US may eventually catch up with Canada.

Disclaimer

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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