Exchange-traded bitcoin fund cleared in Canada

Canada’s main securities regulator has cleared the launch of the world’s first exchange-traded bitcoin fund, the investment manager and the regulator said on Friday, giving retail investors greater access to the booming cryptocurrency.

The Ontario Securities Commission gave Purpose Investments Inc the nod to roll out the Purpose Bitcoin ETF (exchange-traded fund) on the Toronto Stock Exchange.

It is to start trading under the ticker BTCC “as early as next week,” a company spokesman said.

“The ETF will be the first in the world to invest directly in physically settled bitcoin, not derivatives, allowing investors easy and efficient access to the emerging asset class of cryptocurrency without the associated risk of self-custody within a digital wallet,” the asset management company said in a statement.

Gemini Trust Co is to be sub-custodian for the fund, while CIBC Mellon Global Securities Services Co is to administer it.

Launched in 2009, bitcoin has been on a meteoric rise since March, when it stood at US$5,000, spurred by online payments giant PayPal Holdings Inc saying it would allow account holders to use cryptocurrency.

It hit a record high near US$45,000 on Monday after Elon Musk’s electric carmaker Tesla Inc invested US$1.5 billion in the digital currency.

Canadian and US fund companies had tried unsuccessfully in recent years to launch bitcoin ETFs.

Several in recent weeks filed preliminary prospectuses with the Ontario Securities Commission and the Securities and Exchange Commission in the US.

Separately, Twitter Inc chief Jack Dorsey on Friday put out word that he and rap mogul Jay-Z are creating a fund devoted to making bitcoin digital money “the Internet’s currency.”

Dorsey, who is also founder and chief of financial services and mobile payments firm Square Inc, said in a tweet that he and Jay-Z are giving 500 bitcoin to fund an independent endowment called “Btrust.”

That amount of the cryptocurrency was worth about US$24 million on Friday.

“It will be set up as a blind irrevocable trust, taking zero direction from us,” Dorsey said, adding that the fund would initially focus on bitcoin development teams in Africa and India.

He said three board members were being sought, adding a link to an online application that stated the mission is to “make bitcoin the Internet’s currency.”

Skeptics say bitcoin is highly volatile and regulators warn it is vulnerable to illicit use.

Nassim Nicholas Taleb, author of The Black Swan, says he has been getting rid of his bitcoin.

A currency is never supposed to be more volatile than what you buy and sell with it, the former options trader said, adding that you cannot price goods in the cryptocurrency. “In that respect, it’s a failure [at least for now].”

Taleb also said in a separate tweet bitcoin has failed as a hedge against central bank policies.

Bitcoin on Friday touched a new high of US$48,930 after MasterCard Inc and Bank of New York Mellon Corp moved to make it easier for people to use the cryptocurrency. The coin has gained 64 percent so far this year.

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