Canada has set the pace as the first government to ever approve an exclusive bitcoin mutual fund. This builds upon its reputation as a friendly environment for emerging technologies. The atmosphere in Canada seems to be freer and more conducive to innovation in this field,…
Canada has set the pace as the first government to ever approve an exclusive bitcoin mutual fund. This builds upon its reputation as a friendly environment for emerging technologies.
The atmosphere in Canada seems to be freer and more conducive to innovation in this field, based on the numerous developments that the industry has experienced even prior to this time. This is in comparison to its prominent neighbour, the United States, whose Securities and Exchange Commission (SEC) upholds strict measures while trying to figure out appropriate regulatory systems for the blockchain and cryptocurrency ecosystem.
In an exclusive interview with CCN, Sean Clark, CEO of First Block Capital Inc. — the operator of FBC Bitcoin Trust, the first bitcoin mutual fund to trade in Canada — discussed the underlying factors that make Canada a country that is friendly to new technologies such as cryptocurrency. According to Clark, unrelenting education, political will, and open-mindedness, among other factors make the North American nation an ideal hub for technological innovation.
He told CCN:
“I think in general, the Canadian regulatory bodies understand the potential benefits of blockchain and cryptocurrency, and traditionally Canadian regulators have been open to technological innovation. That is different from what you get in places like the US.”
Clark noted that his company, in collaboration with other experts, worked directly with the Canadian securities regulators and educated them for a period of six months while also using the discussions as an opportunity to build relationships. Comparing this to what is obtained in the United States, especially with the SEC, he believes that the Canadian regulators appear to be more open to dialogue with regards to technological innovations.
The elected leadership of Canada is also identified by Clark as a key factor that is enabling the openness of government to cryptocurrency and other emerging technologies. He noted that Canadian Prime Minister Justin Trudeau is embracing blockchain technology. Also, the Canadian leadership sees the United States’ increased isolation of these technologies as an opportunity to get skilled labour migrated into Canada to help contribute to the economy.
“This is what we’re seeing trickling down to the regulatory environment, he said, “as they are not stone-walling but rather embracing and wanting to understand the implications of blockchain technology and working with local companies to be able to understand and have the asset class flourish.”
Another important factor that Clark noted is that the Toronto Stock Exchange (TSX) is one of very few capital markets globally where you can see blockchain and cryptocurrency companies publicly listed.
[Editor’s Note: Several blockchain ETFs have been publicly listed in the U.S., but regulators asked them not to include the word “blockchain” in their names.]
While the the government of Canada offers a relatively conducive environment to blockchain technology and digital currency, Clark noted that they are also ensuring that both institutions and investors are protected against the risks involved. While funds such as First Block Capital are given access into the markets, more critical attention is paid towards them, especially in terms of auditing. So the government and regulatory bodies keep a very close eye on these funds, which facilitates a more cooperative relationship between the companies and the regulators.
Elaborating on the product offered by First Block, Clark described it as a true bitcoin trust, claiming that there is nothing like it currently existing in the industry, even on a global level. The only comparable product as at the time of the interview, he said, was the Bitcoin Investment Trust (OTC: GBTC) from Grayscale in the states. However, while GBTC offers its clients fractional ownership of bitcoin pools, First Block’s services are entirely different in the sense that subscribers’ actual fiat values are exclusively used to purchase the equivalent worth of bitcoin for the period of investment and kept in cold storage to be redeemable in the future. It is like an ETF for qualified investors.
Looking into the future, Clark said that he believes that the digital asset market class will grow into a multi-trillion dollar asset class over the next 5 to 10 years. However, he identified the prevailing bear market cycle in the near-term, so he expects bitcoin and altcoin prices to trade sideways or even down for at least the next four months, ahead of another significant bull run in the next one-and-a-half to two years. This would be powered by the entrance of institutions into the space and the likely approval of ETFs.
Clark concluded by elaborating on his company’s commitment towards creating financial products and providing legitimacy and transparency to the cryptocurrency asset class through traditional equities. This he expects to improve the confidence of investors, who will no longer need to go through unregulated exchanges to participate in the cryptocurrency marketplace. According to him, this will eliminate a lot of risks and at the same time give institutional investors access into the crypto space just like they have access to equities.
Images from Shutterstock
Last modified: January 24, 2020 10:59 PM UTC