3iQ Approval A Rocky Road To Potential North American BenefitsScroll Down
As applications to operate cryptocurrency exchange-traded funds continue to pile up on the desks of regulators at the United States Securities and Exchange Commission, the Ontario Securities Commission has reversed a previously declined request by 3iQ to list a Bitcoin fund that could be listed on the Toronto Stock Exchange later this year. What this means for Canadian investors is that they will be able to trade an instrument that is essentially a closed-end digital currency fund.
For the principals of 3iQ, the road to approval was not an easy one. The first proposal presented to the OSC earlier this year culminated in a rejection that was made formal in February; however, this triggered an automatic appeal, which 3iQ was able to turn into an approval in late October. For the Toronto-based fund management firm, the entire process of formulating the instrument and developing its investment structure took about three years. CEO Fred Pye has a strong background in retail fund management; he has years of experience working as a senior vice president at Fidelity Investments Canada, and he is very familiar with the finer aspects of regulatory compliance.
According to comments made by Pye to the Financial Post, this Bitcoin investment security will be made available through stock brokerages, and it will qualify as a security that can be included in Canadian retirement portfolios. OSC regulators were initially hesitant to grant approval because they felt that average investors may not be familiar with the concept of cryptocurrencies and their implied trading risk, but the same can be said about other securities that are based on foreign currency exchange.
This BTC-backed security will be the first of its kind for retail investors in North America, and it could pave the way for the approval of similar instruments in the jurisdiction south of the Canadian border. It so happens that the custodian of funds for this instrument is the Gemini Exchange, which is an American financial services provider based in New York. Gemini was founded by Tyler Winklevoss and his twin brother Cameron, early investors and co-founders of social networking giant Facebook.