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3iQ Corp. Files Application for Hearing and Review of “The Bitcoin Fund”March 15 – 3iQ Corp. has filed an application for Hearing and Review of the Decision of the Director to refuse to issue a receipt for the prospectus of “The Bitcoin Fund”. 3iQ had publicly filed a non-offering preliminary prospectus for The Bitcoin Fund on October 31, 2018. The decision of Raymond Chan, Acting Director of the Investment Funds & Structured Products Branch of the Ontario Securities Commission (OSC) to refuse to issue a receipt for the prospectus of 3iQ’s The Bitcoin Fund was published on February 15, 2019. According to the OSC’s own regulatory process, 3iQ needed a formal rejection of the prospectus from the Director in order to later appeal at a public hearing in front of a panel of OSC Commissioners. The company is preparing to go to a public hearing in front of three Commissioners of the OSC to address concerns of public interest, custody, liquidity and auditability. The date of the hearing is yet to be determined. Read the full article here. |
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Canadian Regulators Seek Input for Crypto Exchange Regulatory FrameworkMarch 14 – Canadian capital market regulators are asking industry participants for inputs on how regulatory requirements can be tailored for digital asset exchanges that operate in Canada. The joint consultation paper was published by the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) on March 14, 2019. “We must adapt to innovation, and provide clarity to the market about how regulatory requirements might best be tailored and applied to these unique business models, while maintaining investor protection,” said regulators in the paper. The paper notes that Canadian regulators view digital asset and cryptocurrency platforms as being “hybrid” in nature, meaning that the platforms can perform many functions for one or many different market participants. For example, some platforms may operate as a cryptocurrency exchange, but also offer additional functions for custody or offer alternative trading systems. Other issues surrounding securities classification also means that cryptocurrency exchanges could be subject to securities or derivatives regulatory requirements if they list certain digital assets that classify as such. The paper specifically notes that many “utility tokens” have at some point been involved in the distribution of securities, through the form of investment contracts. According to the paper, no cryptocurrency exchanges in Canada are authorized to operate as a marketplace or dealer of securities. Read the full article here. Read the consultation paper from the CSA/OSC here. |
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CME Plans “No Change” for Bitcoin Futures After CBOE Pulls BackMarch 15 – The Chicago Mercantile Exchange (CME) has confirmed that it has no plans to change its bitcoin futures contracts. The news follows the Chicago Board and Options Exchange (CBOE) and CBOE Futures Exchange (CFE) decision on March 14th to not add a bitcoin (XBT) futures contract for trading in March 2019. This means that after the last currently traded futures expire in June, the (XBT) futures market will stop at the CFE until new futures get listed again. “CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading,” said the CBOE in a notice to investors. Both the CBOE and CME introduced bitcoin futures contracts in late 2017. Despite both being pegged to spot bitcoin prices, the CBOE’s (XBT) futures contract volumes have been dwarfed in comparison to those at the CME (BTC). A possible reason for the difference in volumes could be that the CME bitcoin futures (BTC) use a more diverse price discovery method which is an aggregate price of several spot markets, rather than the CBOE which depends on one price provider. Read the full article here. |
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SEC Could be Chasing Billions out of the US Economy with no Bitcoin ETF ApprovalMarch 15 – Cryptocurrency and other digital asset investors have long-awaited the approval of a North American bitcoin exchange-traded fund (ETF) which could greenlight the entrance of new retail and institutional investments into the sector. The Securities and Exchange Commission (SEC) has rejected several bitcoin ETF proposals from different issuers throughout 2018, citing issues surrounding custody, price discovery, and price manipulation among other factors. The lack of a tradeable bitcoin ETF on a North American exchange has had cryptocurrency investors flocking to unregulated exchanges – many of which are based overseas. Binance, a leading cryptocurrency exchange founded by the Chinese entrepreneur Changpeng Zhao, had significant profits in 2018 and indirectly paid out almost $500 million USD to holders of its exchange token, Binance Coin. Binance is just one of hundreds of cryptocurrency exchanges around the world that continue to operate outside of the US and its federal securities regulations. Some industry participants could be happy to see that the SEC is dragging its feet on approving a bitcoin ETF, as it allows cryptocurrency exchanges to further develop their businesses and accumulate more market share. The approval of a bitcoin ETF still remains up in the air so far in 2019 with no new significant announcements coming from the SEC. Read the full article here. |
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IBM Enters the Crypto Custody Market With Technology Designed for Banks, Other InstitutionsMarch 12 – IBM has quietly entered the crypto custody market through its private cloud and encryption technologies. Sometime near the end of March, Shuttle Holdings, a New York-based investment firm, will launch the beta version of its custodial solution for cryptoassets which is built on IBM’s technology. While both companies won’t directly be storing the cryptoassets themselves, the custodial solution will be a tool for other entities to use. Potential users could be banks, brokers, family offices, investments funds, crypto exchanges, and other individual investors. IBM had showcased the technology at its “Think 2019” conference in February 2019 in San Francisco. The Digital Asset Custody Service (DACS) is not same as some of the “cold storage” wallets widely used by the industry already; in fact, it appears to add an additional security layer on top of them. The technology is built on a hardware security module (HSM), which is essentially a “lockbox” that insures the safety of the private keys for wallets in a “tamper-proof” environment. “There are always trade-offs between security and efficiency, but we do not utilize a traditional cold storage system. Instead, we keep keys at rest encrypted in multiple layers as data blobs so that an organization can store these backups using their pre-existing disaster recovery and backup processes and media,” said Brad Chun, Shuttle Holdings’ chief investment officer. Read the full article here. |
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3iQ Global Cryptoasset Fund: Price as at March 15, 20193iQ is the first regulator approved multi-cryptoasset portfolio manager in Canada, providing accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund. |
