Bitcoin ETF Blasts Off in Canada

  • First North American Bitcoin ETF launches with a bang as US$165 million worth of shares traded on the first day 
  • Physically-settled Bitcoin ETF removes Bitcoin out of the tradeable supply and puts upward pressure on prices so long as demand remains constant
“O Canada, O Canada! You legalized your weed,
O Canada, O Canada, you planted Bitcoin seed.”
 
The timing for North America’s first Bitcoin ETF, could not have been better.
 
Just as Bitcoin blasted past US$52,000 for the first time ever, before retracing, the first Bitcoin product that’s been officially labeled as an exchange-traded fund debuted yesterday in Toronto to a raucous start, with investors exchanging some US$165 million worth of shares.
 
Although Europe has long had several cryptocurrency-tracking products that function like an ETF, Canada’s Purpose Bitcoin ETF invests directly in “physical/digital” Bitcoin.
 
Bitcoin has surged some fivefold in the year to date, making it one of the best investment assets of 2020 and despite concerns over speculative froth in the market, continues to garner more mainstream attention.
 
Bloomberg Intelligence analyst James Seyffart notes that while it is unclear how much of the activity in Purpose Bitcoin ETF was the result of inflows into the fund, trading volumes were well above an ETF’s typical first day in Canada.
 
It’s still too early to tell, but proponents argue that an ETF will trade without the massive premium investors pay over the underlying assets they track, a problem plaguing many current Bitcoin trusts in the U.S. including Grayscale Bitcoin Trust, a popular gateway to Bitcoin among many American institutional investors.
 
Not to be outdone, the U.S. currently has several active Bitcoin ETF candidates, including the ones from VanEck Associates and Bitwise Asset Management, but Bitcoin’s notorious volatility and allegations of price manipulation remain substantial regulatory concerns in approving a U.S. Bitcoin ETF.
 
Yet with the prospect of crypto-savvy and long-time advocate of greater regulation of cryptocurrencies, Gary Gensler, set to take the helm at the U.S. Securities and Exchange Commission, hopes of the first U.S. Bitcoin ETF are rising.
 
Gensler is Professor of the Practice of Global Economics and Management, lecturing on blockchain technology and cryptocurrencies at the MIT Sloan School of Management, and is a member of the New York Fed Fintech Advisory Group.
 
Over the past decade, Gensler has long believed in greater regulation of cryptocurrencies whilst maintaining the U.S. lead in financial innovation and technology. 
 
 
 

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