Written by: Jay Yi, MBA; Edited by: Chris Thompson, CFA, MBA, P.Eng
eResearch | 3iQ Corp. (“3iQ”), a Canadian based investment firm focused on digital assets, received approval from the Ontario Securities Commission (“OSC”) to launch its closed-end Bitcoin fund, after its proposal was initially rejected in February. The OSC panel directed the OSC Director to issue a receipt for a final prospectus of the Fund, which is expected to launch on a major Canadian stock exchange this quarter.
3iQ
3iQ is focused on providing innovative investment products and is currently managing two digital asset funds: the 3iQ Bitcoin trust, which holds bitcoin, and the 3iQ Global Cryptoasset Fund, which holds bitcoin, ether, and litecoin. The funds are targeted towards accredited investors in Canada.
The Bitcoin Fund
Over the past three years, 3iQ has been working with the OSC’s Investment Funds and Structured Products Branch to achieve approval for its bitcoin fund, which is to be offered within registered and traditional investment accounts, with a goal to provide an accessible, trustworthy, and regulated method for retail investors to invest in bitcoin.
3iQ already had its proposal rejected earlier this year after concerns regarding audit, custodial, and pricing issues were raised by the OSC. The concerns have now been addressed through the support of several partners.
Partners
Gemini, a digital asset exchange and trust company based in New York. Gemini allows clients to buy, sell and store cryptocurrencies such as Bitcoin. It is one of the first partners to join the bitcoin fund project and will be acting as a custodian for the cryptocurrency held by 3iQ. Gemini is subject to capital reserve requirements, cybersecurity requirements, and banking compliance standards.
VanEck, a regulated index provider known for launching the first U.S. gold fund in 1968, worked closely with 3iQ through its MV Index Solutions subsidiary, to provide support and consultation for developing an innovative bitcoin benchmark and addressing regulatory concerns.
Unfortunately, according to Genesis Capital, an institutional digital asset lending firm, demand for bitcoin loans has decreased, with the share of active bitcoin loans down to 50.2% in Q2/2019 compared with 68.1% the quarter prior. This was mainly attributed to the new U.S. dollar issuance coupled with an increased demand for alternative coins such as Ether.
Cyrptocurrency is still volatile but larger and more credible organizations are starting to focus on digital asset projects in an effort to create new methods of investing, transferring funds, and holding assets. Facebook, Inc. (NASDAQ: FB; LSE: 0QZI; DB: FB2A) recently attempted to use major corporate partners to quickly advance its global cryptocurrency, Libra. However the project has been halted in its tracks as regulators voice concerns and partners such as PayPal cut ties with the project.
As different companies continue to build products and services to support cryptocurrencies, will digital assets one day become a common instrument of value?
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