Following approval from the OSC, the fund will provide a regulated vehicle for investors to gain exposure to bitcoin.
On Thursday (November 28), 3iQ filed its prospectus to launch Canada’s first bitcoin investment fund.
Following approval from the Ontario Securities Commission (OSC) in late October, 3iQ announced that it will launch The Bitcoin Fund by way of an initial public offering of Class A and Class F units at US$10 each in a closed end fund.
“We look forward to offering retail investors exposure to this exciting new asset class within registered and traditional investment accounts,” said Howard Atkinson, chairman of 3iQ, in a press release.
Initially, the fund was rejected by the OSC as regulators scrutinized the viability of bitcoin within regulated investment vehicles. Investment Executive reported that regulators specifically questioned the liquidity risk involved with the fund.
“Some novel asset classes and securities products fail. They become tulip bulbs or dot-coms. Others succeed and become gold or the next great technology. Securities regulators are not mandated to try to pick winners and losers,” the OSC filing said.
Ultimately, after 3iQ responded to concerns surrounding the fund’s custody, audit and pricing, it received approval and 3iQ refiled its prospectus. The company attributed this success to key support from Raymond Chabot Grant Thornton and Osler, its legal team. Canaccord Genuity will be leading the offering.
“We knew we could challenge this and we could fight and win, but we had to get it right,” Fred Pye, CEO of 3iQ, told BetaKit. “After the disaster of QuadrigaCX and, obviously now, Einstein Exchange, Canadians deserve a regulated, registered, and licenced product. Now they’ve got one, which is amazing.”
The Toronto-based firm already runs two digital asset funds — the Global Cryptoasset Fund and the Bitcoin Trust — open to accredited investors. Leading the custodial duties of the fund is New York-based Gemini Trust Company.
As of October, the Cryptoasset Fund has had 100 percent returns year-to-date and holds a combination of bitcoin, at 51 percent of its holdings, ether at 37 percent and litecoin at 12 percent. It held a net asset value of C$7.93, with an initial net asset value of C$10 at inception.
Alternatively, the Bitcoin Trust has gained 137 percent during the same time period, with a net asset value of C$19.58.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.