On April 9, Canadian asset manager 3iQ announced that its efforts to launch a fund tied to Bitcoin (BTC) on the Toronto Stock Exchange had finally come to fruition after three years of continued legal disputes. As a result of this move, 3iQ has become the first firm to release such an offering commercially on the exchange.
Currently trading under the name, “The Bitcoin Fund,” the offering has around 1.5 million Class A “QBTC.U” shares available on the Toronto Stock Exchange, or TSX. At press time, each share is trading for around $12. The price indexes being used by the fund are from crypto data company CryptoCompare and VanEck Europe subsidiary MV Index Solutions. 3iQ is serving as the fund’s investment and portfolio manager.
Following this news, a number of prominent members from the global crypto community came forth to express their pleasure with the development. For example, crypto investor and entrepreneur Tyler Winklevoss posted a tweet stating that the launch of 3iQ’s BTC Fund on TSX was a historic event, to say the least.
However, The Bitcoin Fund is under the custody of the Winklevoss’ exchange Gemini, and thus Tyler and his brother Cameron are invested in the fund’s success. Lastly, TSX is Canada’s premier stock exchange, facilitating more than $97 billion worth of monthly trade.
Exposure to the cryptocurrency ecosystem for all
Speaking on the significance of this latest development, Gemini’s president Cameron Winklevoss told CryptoNewspeople that the listing of a publicly-traded Bitcoin fund on a major stock exchange will serve as an important milestone for the industry as a whole — especially in regard to crypto being viewed as a legitimate asset class by the global investment community. He added:
“Now, any investor can get exposure to Bitcoin on the Toronto Stock Exchange in the same way they can buy an ETF to get exposure to oil, gold, or a basket of tech stocks. While exciting, it’s not unexpected; this mirrors the growing appetite that institutional and retail investors alike are demonstrating for incorporating crypto assets into their larger portfolios.”
Additionally, on the subject of how this latest offering will perform in today’s uncertain market conditions and why investor response in relation to BTC-based finance options has been somewhat lukewarm up until now, Winklevoss believes that contrary to popular opinion, customer demand for regulated crypto products has been strong across the investing spectrum — be it the retail or institutional investor market. Not only that, he further opined that as time goes on, market demand for crypto offerings will increase. Winklevoss added:
“In fact, the Bitcoin Fund immediately began trading at a higher than expected premium, underscoring the demand for an easily accessible, securities-based product delivered through traditional channels. 3iQ’s Bitcoin Fund will provide customers with easy access to Bitcoin through their brokerage accounts.”
A drawn-out negotiation process
It is being reported that 3iQ spent the better part of three years negotiating with the Ontario Securities Commission before its request was finally granted for the Bitcoin fund to get listed on TSX. The firm had originally filed its prospectus for The Bitcoin Fund all the way back in 2017.
According to 3iQ, its latest BTC-tied financial offering can essentially be viewed as a rules-based index that seeks to provide investors and casual crypto enthusiasts with a solid means of tracking Bitcoin’s performance via a host of premium crypto exchanges such as Binance, Bitflyer, Bitstamp, Coinbase, Gemini, itBit and Kraken.
The fund is closed-end in nature, and 3iQ has concluded the initial public offering of its units. In this regard, a total of 1.5 million Class A units of QBTC.U shares have been listed that represent a total asset value of around $14 million.
The road ahead may still be rocky for BTC and crypto-related offerings
To gain a better understanding of some of the challenges that lie ahead for publicly traded crypto funds, Alex Benfield, an analyst for Digital Assets Data — a fintech firm that builds enterprise-grade software and data feeds — told CryptoNewspeople that in his view, even though the global macro backdrop may be improving for cryptocurrencies, it will still be difficult for similar funds to get listed on various exchanges in the foreseeable future. However, he does believe that public perception is warming up to the crypto market:
“The demand for BTC-based finance options has been lackluster so far and has not lived up to previous hype. In market conditions like this, we would expect individuals to leave what they see as risky positions first as they move to build up cash reserves.”
Due to the fact that Bitcoin is still widely considered a risky investment avenue, it would not be surprising to see low market demand continuing in the near future without a prominent market narrative such as Bitcoin being seen as a safe haven.
Earlier this year, 3iQ partnered with Mavennet to launch an ERC-20 stablecoin pegged to the Canadian dollar — called QCAD. It has been reported that this new asset will be regulated by the Financial Transactions and Reports Analysis Center of Canada from June. In this regard, Benfield believes that the release of this new Canadian dollar-backed stablecoin clearly shows that it is possible for crypto firms to work with regulators to create certain crypto-based financial offerings:
“At this point, we can’t extrapolate on whether governmental demand for these stablecoin type offerings has changed at all. However, this stablecoin offering can act as a beacon to other countries that it is possible to digitize their financial instruments while not lowering the proverbial regulatory bar.”
The Toronto Exchange also has shares from other crypto-related ventures on its roster, including Bitcoin mining company Hut8, crypto bank Galaxy Digital, and Horizon — a scalable platform that allows users to create their own public or private blockchains. Not only that, shares of 3iQ’s “Global Cryptoasset Fund” have also been trading on TSX NAVex since Q4 2018.