The Investing News Network had the opportunity to speak with Sean Clark, CEO and co-founder of First Block Capital, about the approval.
Big news, Canadian bitcoin enthusiasts: accredited investors in Canada can now get access to bitcoin without needing to acquire, store or manage it, thanks to approval of First Block Capital’s FBC Bitcoin Trust.
Announced September 14, First Block Capital’s private placement offering of units of the FBC Bitcoin Trust makes it the first registered investment fund in Canada that’s solely dedicated to cryptocurrency investments. Adding to that, the BC Securities Commission states that it had granted the company registration as “an investment fund manager and an exempt market dealer in order to operate a bitcoin investment fund.”
“[It was] a landmark decision to get our registration granted,” Sean Clark, co-founder of First Block Capital said in an interview with the Investing News Network (INN). “We’re very proud of that, it was a lot of hard work.
Founded earlier this year, Clark said that he and his partner Marc van der Chijs, co-founder of First Block Capital, said it was their vision to create an asset management company that “would connect institutional retail money with opportunities in the blockchain and cryptocurrency space.”
“Our vision is to create a fleet of investable products that gives access to cryptocurrency for qualified investors,” Clark explained. “Our first product is the FBC Bitcoin Trust, which is being sold to credited investors, currently.”
In our interview, Clark discusses what the next steps for the company are, his thoughts on the vibe from Canadian investors as it relates to cryptocurrencies, how the First Block Capital Bitcoin Trust will set Canada apart from other countries, and the case for investing in bitcoin, to name a few.
Below is a transcript of the interview. It has been edited for clarity and brevity.
INN: Now that First Block Capital has become the first registered investment fund manager in Canada dedicated to cryptocurrency investments, what are the next steps from there?
SC: The first step for us is to sell the Bitcoin Trust Fund, so we’re well on the way to doing that. We’re contemplating, based on demand, also rolling out an ethereum trust and potentially a cryptocurrency top five tracker trust as well that would be available to eligible investors as well.
We have aspirations to take the FBC Bitcoin Trust public when the regulatory environment is right.
By that, our ultimate goal is to have a publicly traded bitcoin fund.
INN: It’s been quite the year for cryptocurrencies, but in Canada it’s been slow on take off. So now that First Block Capital will make it more accessible, what is your vibe from investors in Canada about cryptocurrencies?
SC: There’s huge pent-up demand for getting access to getting to investing in cryptocurrency in a safe and titled way. What we’ve done with the FBC Trust is we’ve made it so that you can purchase it through your broker and purchase it like any other equity or fixed income product so that it shows up on your monthly statement. It’s essentially just another product that you can buy, and then there’s reporting and you have visibility into it. You can actually put the units of the FBC Trust into your self-directed accounts: your TFSA, your RRSP. We really just securitized it and turned it into a financial product so that it looks like an equity.
INN: I read in the press release that you said Canada can become a leader in the cryptocurrency space through the First Block Capital Bitcoin Trust. How will this set Canada apart from other countries?
SC: The regulatory bodies at the Canadian Securities Administration Canada have been fantastic, and they’ve been very cooperative. We work hand in hand with them. The reason why we got our registration is because we were able to educate the commissions and they’ve been very receptive and they’ve been very open to allowing experts in the field educate them. Ultimately, they’re mandated to protect the Canadian retail investor, and by them granting us registrations, we provide them with adequate piece of mind to know that the way we are running funds will have the protection of the Canadian investor in mind first. That’s why they let us through.
INN: Bitcoin and cryptocurrencies, they’ve been compared to safe-haven assets like gold and silver. Why in your mind is there the case for investing in bitcoin?
SC: There’s really three reasons why an investor would invest in bitcoin. Overall, it’s part of an emerging asset class. It’s called the digital currency asset class. So this is a brand new asset class. It’s getting created through technological innovation. This asset class, at the beginning of the year, the total market cap was $30 billion. That includes bitcoin, ethereum and [other] tokens. That market cap has increased to $137 billion [ as of September 19]. Marc [van der Chijs] and I believe that this will become very quickly a $500 billion market cap asset class, and ultimately a $1 trillion market asset class. That’s really from the invention of the blockchain.
So, three reasons why you would invest in this new asset class: 1) you believe that bitcoin is a stored value so that investors want to diversify from holding just gold because bitcoin is proven to be a low-correlated asset to the rest of the market. So a lot of institutions and … offices are taking smaller positions in crypto just to diversify their portfolio. One percent to five percent of their AUM is now in crypto, just as a hedge. If gold, which is an $8 trillion market, and only 10 percent of it moved into bitcoin, [that] would [make it] an $800 billion market. Currently the market cap of bitcoin is about $60 billion, and if you were to go to $800 billion that would put the price of each bitcoin to around $50,000 per coin.
The second reason is that it’s a new financial rail, meaning a new way to money around the world. You don’t have to go through a bank. If you’re wiring money globally, you know the pain of using a swift code, bank fees, intermediary banks, and it takes five days. With cryptocurrencies, it’s a new financial rail. Huge amount of funds, no matter how big or how small, can be transferred instantaneously to the other party with limited transactions.
The third and final reason to invest in bitcoin is because of the technology that underpins bitcoin, and that’s the blockchain. Blockchain is a distributed ledger technology that was an invention. It’s important to know that bitcoin and blockchain are interlinked. You cannot have one without the other. As more companies adopt blockchain technology, the price of bitcoin will rise as well because you need bitcoin. It’s like the fuel that drives the blockchain. So they’re hand in hand.
INN: There’s been a lot of uncertainty surrounding bitcoin and cryptocurrencies lately particularly with the news out of China due to talks of the ban, do you have any advice for investors who might be a little unsure about this?
SC: China hasn’t actually banned bitcoin. What China has done is shut down the exchanges temporarily to control them. OTC trading is still allowed in China. What [my partner] expects to see is that exchanges will be let back in operation, but with party control. The state will own a portion or all of it and they really want to … stop the capital outflow. They don’t want to stop blockchain, they don’t want to stop bitcoin, they just want to start regulating the exchanges. The way that China does it is just shut everything down and then open it up by controlling it.
INN: What is the biggest thing you’re excited about as it relates to First Block Capital moving ahead?
SC: This is a brand new asset class that’s going to be a $1 trillion asset class and we are at the forefront of that as the first regulated crypto investment firm [in Canada] and we’re really just bringing additional capital into the space, but will drive innovation that will increase the adoption of blockchain technology. I’m just excited to see what companies come out of this.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.