The Ontario Securities Commission (OSC) approved the first publicly traded Bitcoin exchange-traded fund (ETF), the first of its kind in North America and around the world.
On February 11, the OSC revealed the approval document, which is filed under a Multilateral Instrument passport system and grants authorization to the ETF in thirteen other Canadian jurisdictions.
Bitcoin traders will now be able to run ETFs in British Columbia, Quebec, Manitoba, Alberta, Saskatchewan, Nova Scotia, New Brunswick, Newfoundland, Prince Edward Island, Yukon, Nunavut, and the Northwest Territories.
ETF to invest in investing long-term in BTC
The Bitcoin ETF It will be used to track the price of bitcoin and allow investors to buy into the fund without having to deal with bitcoin directly. It eliminates the complex processes that investors need to navigate or understand to successfully trade the crypto market.
According to a fact sheet published by Canadian assets Manager Purpose Investments, the ETF will track the performance of the bitcoin price No fees and exchanges related to the ETF, and will not speculate on short-term price changes.
“The ETF invests in Bitcoin. Given the speculative nature of bitcoin and the volatility of the bitcoin markets, there is considerable risk that the ETF will not be able to meet its investment objectives. "
The ETF therefore overlooks the three key points that make new investors reluctant or unable to invest in bitcoin; using crypto exchanges, transferring bitcoins between wallets, and keeping bitcoin securely in hot or cold wallets. They can now buy and sell ETFs using traditional market knowledge and structures.
The fact sheet also states that the ETF can invest in asset classes or use investment strategies that are not allowed for other types of mutual funds.
"Specific strategies that differentiate this fund from conventional mutual funds may include: the ability to borrow cash to use for investment purposes and an increased ability to invest in physical commodities."
Also, more investors will be able to sell bitcoin short using the ETF, which in the long run will be good for reducing bitcoin volatility.
The Ontario Securities Commission outperforms the US SEC
The US Securities and Exchange Commission has yet to approve any bitcoin ETFs, due to the many regulatory loopholes surrounding bitcoin and the emerging digital asset class in general.
In 2017, the US SEC denied an ETF application by the Winklevoss twins, citing lax regulation that would make Bitcoin susceptible to fraud and manipulation. However, after much insistence, the US granted them a patent for Winklevoss IP LLP for exchange-traded products, in 2018. The Chicago Board of Exchange also awaited ETF approval in addition to launching bitcoin futures and options.