Not long ago, it was being discussed if 2021 would be the year in which a bitcoin-based exchange-traded fund (ETF) would finally be introduced. The product has experienced heavy delays and angry looks from organizations such as the Securities and Exchange Commission (SEC), which claims that bitcoin is too volatile and too vulnerable to fraud and other security issues to ever serve as the basis of an ETF.
Canada Will Give the World Its First Bitcoin ETF
Now, however, it looks like the way is finally being paved as Canada’s financial regulators have given the greenlight to a new bitcoin ETF, which will be issued by Purpose Investments Inc. Known as the Purpose Bitcoin ETF, the product will allow customers to invest in physically settled bitcoin units, thereby preventing some of the risk associated with the digital asset from hitting traders.
Among the companies that have tried to introduce such a product to the U.S. include Van Eck and Bitwise, with the latter being one of the latest examples. Matt Hougan – chief investment officer of Bitwise Asset Management – doesn’t appear upset that a Canadian blockchain company beat his enterprise to the punch, claiming that this is a solid move for the cryptocurrency industry.
In a recent interview, he claims:
We are excited by this development for the entire industry, but more importantly for investors who would like regulated and transparent exposure to this new asset class. We look forward to the day when the United States regulatory environment has evolved to a state where bitcoin ETFs can be issued here as well.
Canada has often served as a leader in the development of new financial and cryptocurrency-based products and has repeatedly beaten regions such as the U.S. to the front lines. For example, Canada was the country to introduce the first ever ETF, while Canada also initially released marijuana-related funds.
In addition, several European countries have physically backed crypto products that work very much like ETFs, suggesting that the United States may be falling behind somewhat in crypto innovation. Eric Balchunas – a Bloomberg intelligence ETF analyst – said in a recent statement:
Canada has a long history of approving new types of ETFs before the U.S., and the U.S. has a history of following. Thus, we think this is good news for bitcoin hopes in the U.S.
The Time Has Finally Come
In a recent discussion, Jeff Kilburg – founder and CEO of KKM Financial – expressed confidence that 2021 would be the year in which a bitcoin ETF was introduced, and now it looks like he may have been right. In the discussion, he said:
I think this is all coming together… If they can offer a solution via an ETF, regulate it and it can trade more accurately to the actual spot price of bitcoin, that’s the win-win solution for all active and passive investors.