Canada has a number of cryptocurrency ETFs (Getty)
Cryptocurrency investors in the US are celebrating a milestone today: the first day of trading for the first Bitcoin ETF on the New York Stock Exchange.
But Canada has been ahead of the curve with ETF options for U.S. investors for some time.
The ProShares Bitcoin Strategy ETF (BITO) is based on futures contracts, which do not always track the physical price of Bitcoin well. The Securities Exchange Commission has not approved any ETF that directly holds physical Bitcoin (BTC-USD).
Greyscale has a trust (GBTC) that physically holds Bitcoin. The trust structure may result in differences between the fund’s net asset value and the Bitcoin price. On Tuesday, Greyscale filed to convert to an ETF.
Canadian regulators approved ETFs that hold Bitcoin directly earlier this year. The first was launched by Purpose Investments on the Toronto Stock Exchange in February. The Canadian dollar-denominated, unhedged version trades under the ticker symbol BTCC.B. American investors looking to use greenbacks have the U.S. dollar-denominated version’s ticker as BTCC.U.
“An official ETF structure provides daily liquidity and daily markings to the market and market makers and its sole role is to ensure that the price of the ETF and the price of the ETF’s net asset value are directly linked and throughout the day “Som Seif, founder and CEO of Purpose Investments, told Yahoo Finance Canada in February.
“If you only hold futures and roll the futures, there is a risk that Bitcoin will underperform over time because the price is based on a futures price and not a current price.”
Barriers to entry
Waseem Mamlouk, vice president of capital markets at Nimbus DeFi, says a number of factors could be holding U.S. investors back.
“There may be custody concerns given that the actual asset for them is traded through a foreign-owned investment firm, and there have always been security issues surrounding the custody of cryptocurrencies. So that would be the biggest reason, but there are other reasons for it. “Certainly, including ease of access, just because there are trading desks and partners in their own city that can offer these services now,” he told Yahoo Finance Canada.
The story goes on
Depending on the broker, there may also be more legwork involved.
“Assuming a retail investor has an account with Robinhood, Fidelity or Schwab in the US, they actually couldn’t just buy it on their own,” Vlad Tasevski, chief operating officer and head of product at Purpose Investments, told Yahoo Finance Canada. “You would have to go through a series of approvals and then manually answer the call to the order counter.”
“Eventually they will get there. But there are many obstacles.”
Evolve launched a similar version of these ETFs under Canadian dollar EBIT and U.S. dollar EBIT.U the same week. Next came the CI Galaxy Bitcoin ETF BTCX-B for Canadian dollars and BTCX-U for US dollars.
There are also a number of Ethereum ETFs (ETHH). (ETHH-U) (ETHR) (ETHR-U) (ETHX-B) (ETHX-U) a combination of Bitcoin and Ethereum (ETC) (ETC-U) and even an inverse Bitcoin ETF to bet against (BITI) (BITI- U).
With files from Jeff Lagerquist
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
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