Canada’s Ontario Securities Commission (OSC) has recognized that Bitcoin is a legitimate market, trading in millions of dollars per day in a host of exchanges. For that very reason, it has reversed a prior decision and given a green light for a Bitcoin Fund IPO, which will offer participations to retail investors. With this simple action, Canadian officials have leapfrogged past the Securities and Exchange Commission in the United States, which has steadfastly resisted every Bitcoin ETF application to come along.
Yes, a Bitcoin Fund IPO is not the same “animal” as an Exchange-Traded Fund (ETF), but the effect is the same. It is a “closed-end investment fund established as a trust under Ontario’s laws”. The fund manager will be 3IQ Corp., a crypto-focused investment fund that was founded in 2012. The firm already has two other digital asset funds that it manages. Both are private funds that only serve accredited investors.
Bitcoin.com noted that the new fund is a bit different:
The company explained that the units will be an eligible qualified investment for registered investment accounts. The fund’s investment objectives are to provide investors with long-term capital appreciation and exposure to bitcoin and its daily price movement in USD, the announcement details.
3IQ has been valiantly trying to bring a Bitcoin related fund to the Canadian public since 2016. Its previous prospectus was rejected by the Ontario Securities Commission (OSC), but the process allowed for a public hearing. 3IQ took advantage of the extra time permitted to present more data and arguments, upon which the head of the OSC relented and ordered that the prospectus be “received”.
OSC staff had previously raised objections to the prospectus, which actually had been submitted in October of last year. The staff’s major concern was that the fund was “not in the public interest of Canadians.” A rejection followed in February. After a public hearing, further review, and several additional meetings, however, OSC Commissioner Lawrence P. Haber applied his own judgment, making such statements as:
- “It is not the role of securities regulators to approve or disapprove of the merits of the underlying investment being offered to the public”;
- “There is sufficient evidence of real volume and real trading in bitcoin on registered exchanges in large dollar size”;
- The staff’s concerns “do not warrant denying a receipt for The Bitcoin Fund’s prospectus.”
- He then ordered the director of the OSC’s Investment Funds & Structures Projects Branch (IFSP) “to issue a receipt for the fund’s prospectus unless new evidence was found to warrant a rejection.”
Is it time for the Bitcoin community to celebrate? Not quite yet… 3iQ executives said that it took several weeks for the regulator to officially acknowledge receipt of the Bitcoin Fund IPO prospectus in writing, but that step has been completed. According to OSC staff, however:
There are remaining steps for completion before a final offering prospectus can be receipted.
What… more red tape? The “remaining steps” actually deal with what the Commissioner had included in his order – pricing information and underwriters’ names. Mr. Haber also included a curious statement in his order that stipulated that:
3iQ also confirmed that it does intend to offer units of the fund to Canadian retail investors in all provinces and territories of Canada.
In any event, the clock is now ticking. Soon Canadian retail investors will be able to buy Bitcoin from a public fund without the hassle of dealing with an exchange, storing private keys, or worrying about custodial arrangements in the background. Hopefully, the SEC is watching what has just transpired across New York’s northern border.
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Canadian regulator gives green light for BTC Fund IPO for retail investors was first posted on December 4, 2019 at 3:30 pm.