Canada’s first Bitcoin fund now listed on Toronto Stock Exchange

What if retirement portfolios hedged against chaos in stock markets and exposed them to the next BitcoinBitcoin bull run? One Canadian digital asset manager is making this possible. And it has plans that are “way bigger than that.”

3iQ, a Canadian crypto-asset portfolio manager, listed the first Bitcoin fund on the Toronto Stock Exchange (TSX) today, with the Winklevoss twins’ Gemini as custodian. The fund allows Canadians to invest in Bitcoin through their regulated investment managers, without the hassles of self-custody and with some incentives.

“Ninety percent plus of Canada’s wealth is held in a Canadian regulated investment dealer,” 3iQ President and CEO Fred Pye told Decrypt. “An investment advisor cannot open up a Bitcoin wallet for his client,” he said. Now with “The Bitcoin Fund,” Pye said investors can put Bitcoin on their regular statement with their other investments. “Investors should be looking at diversified portfolios and this should be a part of it.”

While seasoned investors stand to benefit from the fund, Pye said millennials should also consider it as they begin investing in tax-free savings accounts (TFSA) as part of their retirement plan because it eliminates the tax burden that comes with buying and selling Bitcoin through a private exchange.

“If the average 30-year-old can save $6,000 a year, which is your TFSA contribution, that is amazing because most can’t save $500 a month,” he said. “If they buy $500 a month tax-free in Bitcoin into their TFSA, in 10 years, if Bitcoin survives, it could be an astounding amount of money and change their lives.”

The Bitcoin Fund, whose initial product offering (IPO) ended yesterday, took 3iQ several years of persistent talks with regulators before it was approved. “We conceived the idea in late 2014 into early 2015,” Pye said. “We filed our first prospectus in early 2017.”

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From that first prospectus, Pye said 3iQ first persevered through delays with regulators who had said they would create their own sandbox to launch similar products, but never did. Following further delays, a public hearing was held with the Ontario Securities Commission (OSC) in October 2019, which 3iQ won.

The public hearing in Ontario was only the first step for the fund’s approval across Canada. “Canada has 12 jurisdiction,” Pye said. “Now we had to get approved in all the other jurisdictions.” From there, 3iQ had to build a syndicate, and Pye said the banking syndicate in Canada chose not to directly participate. Nonetheless, some banks have allowed their clients to invest in the fund.

“This is a Canadian company [3iQ] that has spent five years trying to bring help to develop Canadian infrastructure for Canadian crypto,” Pye said. “And we’re finally launching it.”

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After overcoming years of resistance in Canada, 3iQ’s ambitions don’t end with Bitcoin and Canada. The company also created another private fund, not listed on the Toronto Stock Exchange, called the Global Crypto Asset Fund in 2018, which includes exposure to Bitcoin, Ethereum and Litecoin. Pye said 3iQ is working to broaden this fund with new cryptocurrencies and blockchains. 3iQ is also behind a Canadian dollar-backed stablecoin called QCAD, which launched earlier this year. 

Now that the fund is available in Canada, 3iQ has its sights set on stock markets around the world. “We’re listing in Gibraltar in May,” Pye said. “Then we expect to co-list this fund around the world in major exchanges,” he added. “Our vision is for this to be the biggest regulated Bitcoin fund in the world.”