TORONTO, Feb. 12 (Reuters) – Canada’s top securities regulator has authorized the launch of the world’s first bitcoin-traded fund, an investment manager said on Friday, giving investors greater access to the cryptocurrency it generated an explosion in commercial interest.
The Ontario Securities Commission approved the launch of Purpose Bitcoin ETF, said in a statement to Purpose Investments Inc., a Toronto-based asset management company. The OSC confirmed the ETF’s approval in a separate statement to Reuters.
“The ETF will be the first in the world to invest directly in physically settled Bitcoins, not derivatives, allowing investors easy and efficient access to the emerging class of cryptocurrency assets,” said Purpose Investments.
Investors have been able to trade bitcoin using futures contracts on the CME derivatives exchange. They can also buy closed-end investment funds, such as Bitcoin Fund on the Toronto Stock Exchange.
An ETF can offer investors some advantages, such as lower rates.
Bitcoin reached a record high of $ 48,975 on Friday. It has gained about 63% so far this year and has shot up about 1,130% since mid-March 2020.
Elon Musk’s Tesla on Monday revealed that it bought $ 1.5 billion in cryptocurrencies and would soon accept it as a payment method for its cars, while the cryptocurrency has been gaining acceptance among major financial firms.
In the United States, eight companies have tried unsuccessfully since 2013 to create a bitcoin ETF, according to Todd Rosenbluth, director of ETF and mutual fund research at the New York CFRA.
Among the issues that the Securities and Exchange Commission seems to be focusing on are the potential for market manipulation and the process of custody audits that check whether a fund holds its alleged assets.
“While some expect the Canadian ETF approval to set the stage for a short-term US, we expect the SEC, under the new leadership, to review some of VanEck’s new records and others,” said Rosenbluth.
VanEck is an investment management company based in New York.
Gary Gensler, former president of the Commodity Futures Trading Commission, was named president of the SEC last month by US President Joe Biden. (Reporting by Fergal Smith and David Randall; Editing by Denny Thomas and Dan Grebler)