Bitcoin ETFs Are Here to Stay (At Least in Canada)

Plus, why fintech is soaring in Mexico as Citigroup retreats.

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Bitcoin ETFs Are Here to Stay (At Least in Canada)

As regular FIN readers know, Canada has authorized Bitcoin-backed exchange traded funds (ETFs) for nearly a year. At least two brokers offer this product, including Purpose Investment’s Bitcoin ETF, which currently has about $1.6 billion (Canadian) in assets under management for the fund. (Brazil, too, now offers a Bitcoin ETF.)

The existence of Bitcoin ETFs might seem unremarkable but for the fact that, a year into the Biden Administration, US regulators have still not approved a straight-up Bitcoin-based ETF, despite repeated requests from would-be providers, from the Winklevoss twins to Fidelity. Last October, the Securities and Exchange Commission (SEC) approved the concept of an ETF built on Bitcoin futures contracts, and almost immediately ProShares began offering its Bitcoin Strategy ETF, although FIN feels sorry for anyone who bought it right out of the gate, given recent Bitcoin plunge:

Still, markets go up and down, and the broader point is that it’s increasingly ridiculous to parse the distinction between okaying an ETF based on Bitcoin futures contracts but not one tied to Bitcoin itself. On the fundamental investment issues—liquidity, custody, storage, valuation—FIN believes that the historic concerns raised by the SEC and others have been largely, maybe entirely, resolved.

Moreover, US regulators ought to welcome a Bitcoin ETF as part of a broader movement to create more price-signaling around Bitcoin, which at least in theory will help reduce volatility. FIN continues to believe that the US will ultimately approve a Bitcoin ETF, and later other cryptocurrency ETFs. As a glimpse into that future via a Canadian lens, FIN presents an edited exclusive interview conducted this week with Purpose Investment’s COO and Head of Product Vlad Tasevski.