Canada has long been one of the most welcoming countries towards cryptocurrencies, and this attitude has been reflected in its regulatory environment, as well as the various opportunities that crypto startups and firms have had over the last year or so to develop their products. Canada has been one of the first countries in the world where crypto ETFs have been introduced on financial markets, open for retail investment. These ETFs have been wildly successful, and even as their counterparts across the border in the US struggle, Canadian crypto ETFs have amassed over $1.3 billion in AUM already.
The largest of these, by far, is the Purpose Investments ETF, which was the first Bitcoin ETF to launch in North America. Its AUM has swelled to $1.1 billion in less than two months since its launch, while two other ETFs which launched shortly after Purpose also have a combined AUM of $200 million at the moment. The Purpose ETF had generated more than $100 million in trading volume on its first day alone and had over $500 million in AUM after its first week. These ETFs offer investors the opportunity to gain access to Bitcoin and other cryptocurrencies without actually owning the tokens themselves, and therefore allow them to participate in the ups and downs of the price of the tokens.
Evolve Fund’s Bitcoin ETF launched just two days after Purpose in February, and even though its management fees are 25% lower than Purpose, it only has $106 million in AUM at the moment. It is a similar case for the CI Galaxy Bitcoin ETF, which launched a little later, and has just over $90 million in AUM, despite slashing management fees to 0.4%. First-mover advantage is a huge factor here, and Purpose has been able to gain such a huge market share for precisely this reason.
Nevertheless, this is still a far better scenario than that being seen in the US, where approval has still not been granted for a crypto ETF. The likes of Galaxy Digital, SkyBridge Capital and Fidelity have all filed Bitcoin ETF applications in recent months with the US Securities and Exchange Commission, but none of them have been approved thus far. There is still no timeline as to when we will see the first Bitcoin ETF in the US, with some observers believing they could still be one to two years away, while others are of the opinion that the continued increase in relevance and popularity of Bitcoin and other crypto tokens, along with the successful examples in Canada, may fast-track this process.
These ETFs are a great way for investors to be able to gain access to crypto without having to own the tokens themselves and are very similar to how other ETFs operate. Thus, there is no reason to hold approval back, as such ETFs will not directly lead to a wave of money flowing into cryptocurrencies. Of course, many people may choose to invest in tokens directly instead of opting for the ETF, but that is the case at the moment as well. Cryptocurrencies are becoming more and more relevant, and are being used for transactions as well. With the likes of PayPal, Square and Tesla, to name just three companies, accepting and processing Bitcoin and crypto payments, it is high time that regulators wake up and realize that crypto is here to stay, and so the best way forward is to provide reasonable and fair regulations and guidelines on which crypto firms can operate. This will only help improve the health of the industry as well as the overall economy while leading to jobs and wealth creation as well.