Canadian First Block Capital’s FBC Bitcoin Trust achieved mutual fund trust status yesterday from regulators, allowing accredited Canadian investors to hold the Bitcoin mutual fund within their registered accounts.
The Bitcoin mutual fund is now available for accredited investors (those with high incomes or net assets) to place the fund into their Tax Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP). The TFSA and RRSP are investment accounts which allow Canadians to shelter their investments from taxes for retirement.
How the Bitcoin Mutual Fund Works
The FBC Bitcoin Trust has been available to Canadian accredited investors for about a year and allows those investors to have exposure to the bitcoin market without actually holding Bitcoin. First Capital takes the investments and purchases bitcoin which is stored with their custodian partner Xapo. In return, they charge a 1.5% management fee to investors.
According to the company’s press release, the bitcoin mutual fund is the ‘first and only’ product of its kind approved by both the Ontario and British Columbia provincial securities regulators for registered accounts.
In addition to the the FBC Bitcoin Trust being listed as a Bitcoin mutual fund, it will also now be available for investment advisors to trade on the NEO Connect trading platform under the ticker FBCBT. This will provide daily liquidity for the Bitcoin mutual fund and allow for it to be traded the same way as Exchange-Traded Funds (ETFs).
Prior to the listing in NEO Connect, the Bitcoin mutual fund had a 30-day redemption clause, which was a major barrier to further investment according to Sean Clark, CEO of First Block Capital in an interview with the Globe and Mail:
Canadian Regulators Opening Doors While US Regulators are Being More Cautious
The additional options for ways which Canadian investors can invest into Bitcoin is in contrast to recent happenings south of the border. Not only has the US regulator the Securities and Exchange Commission (SEC) recently denied or delayed several Bitcoin-based ETF listings, but they’ve also started halting trading of foreign listings.
Yesterday the SEC suspended trading of Bitcoin Tracker One and Ether Tracker One, which are cryptocurrency-related products listed on the Nasdaq Stockholm exchange.
The products are offered by Swedish company XBT Provider and according to the suspension order from the SEC website there is a lack of ‘current, consistent and accurate information’ regarding what they actually are. According to the notice the instruments have been represented as “Exchange Traded Funds”, “Exchange Traded Notes” and “non-equity linked certificates” resulting in confusion as to what they are.
While the Canadian government recently delayed an update of anticipated regulations for cryptocurrency and blockchain companies, generally the regulatory environment has been more open north of the 49th parallel.
There are already quite a few cryptocurrency-related companies that are publicly listed in Canada, among them crypto miners and aspiring crypto merchant banks. Canada has also become a region of interest for crypto miners who hope to take advantage of the colder climates and lower electricity costs. Canadian crypto exchanges have also been expanding beyond the borders and have not yet faced any significant regulatory burdens.
With the Bitcoin mutual fund, First Block is furthering opportunities for those interested in investing in cryptocurrency and digital assets. The company also has broader plans on the horizon with both a Blockchain ETF and a Crypto Index Fund in the works.
For Canadians who are looking at investing in cryptocurrencies the options are expanding. Then again, the ability to invest in crypto directly and be your own bank has been there ever since Bitcoin was born.