Please note that I am not commenting on the merits of bitcoin as an investment. To be honest, I’m on the fence. There are very smart people on either side of the argument. Bitcoin is a highly speculative and risky investment that comes with lots of volatility and a real risk of losing some or all of your investment.
February 18th and 19th. Mark those days in your diary, because that’s when the world’s first bitcoin ETFs were launched.
This has been years in the making, as regulatory hurdles seemed insurmountable. Yet, Purpose Investments and Evolve ETFs (both Canadian firms, by the way) are listing bitcoin ETFs one day apart on the Toronto Stock Exchange (TSX).
Until now, investors could only buy bitcoin through a bitcoin exchange, which is cumbersome, or via a closed end fund. While the buy process is simplified using a closed end fund (because it is listed on a stock exchange), the product structure allows the fund’s share price to drift significantly from the value of its underlying assets – in this case, bitcoin.
The ETF structure should address these issues and the performance of the ETFs should more closely track the performance of the underlying asset.
According to an article on Bloomberg:
“There’s sizable untapped interest for a Bitcoin investment that has the benefits of an ETF,” said Todd Rosenbluth, CFRA Research’s director of ETF research. “Unlike pre-existing products, an ETF is unlikely to trade a significant premium- to-net-asset-value. While most ETFs come to market globally with an educational hurdle to overcome, many investors are familiar with what is inside BTCC.”
The U.S. currently has several active filings for Bitcoin ETFs including ones from VanEck Associates Corp. and Bitwise Asset Management, but the price swings notorious in cryptocurrencies and allegations of industry manipulation remain hurdles to regulator approval.Source: Bloomberg
The Purpose Investments ETF, which listed on the TSX February 18th, gained immediate attention from investors. Basic product details are as follows:
Som Seif, CEO of Purpose Investments discusses his company’s new ETF in the following interview with NASDAQ.
The Evolve ETFs bitcoin fund will be listed on the TSX on February 19th: