3iQ's Bitcoin fund gets OSC green light

After three years of work, the firm is poised to offer retail investors innovative exposure to the digital asset class

3iQ's Bitcoin fund gets OSC green light

3iQ, a Canadian investment fund manager focused on disruptive technologies and the digital asset space, has received a favourable ruling from a panel of the Ontario Securities Commission (OSC) with regards to its Bitcoin Fund.

In a 26-page decision document issued on October 29, OSC Commissioner Lawrence P. Haber set aside a ruling by the OSC’s Investment Funds & Structured Products branch to deny a receipt for a final prospectus of the fund.

Rejecting arguments that bitcoin is an illiquid asset, Haber ruled that the fund’s exposure to the cryptocurrency does not contravene NI 81-102’s illiquidity provisions. He also held that OSC staff’s concerns regarding the bitcoin markets and the fund’s ability to value and safeguard its bitcoin holdings were not enough to warrant a denial of the fund’s prospectus.

“Accordingly, I will order that the [OSC Director’s] decision be set aside and the Director issue a receipt for the Fund’s prospectus,” Haber wrote in his ruling.

With that decision, the stage is set for 3iQ to see its closed-end bitcoin fund listed for trading on a major Canadian stock exchange.

“Over the past three years, we have worked actively with the OSC’s Investment Funds and Structured Products Branch to create an investment fund that we hope will allow retail investors the benefits of investing in bitcoin through a regulated, listed fund,” said 3iQ President and CEO Fred Pye in a statement announcing the decision.

“We have addressed the questions of pricing, custody, audit, and public interest issues in a regulated investment fund,” Pye said.

Howard Atkinson, chairman of 3iQ, expressed gratitude for the support the firm received from its legal team at Osler, as well as auditors from Raymond Chabot Grant Thornton (RCGT).

The release also highlighted the development of an innovative bitcoin benchmark from VanEck’s MV Index Solutions. “We were pleased to work closely with 3iQ in both the development of the index and in working with the regulators to address their concerns,” said Jan van Eck, CEO of VanEck.

The firm has selected Gemini Trust Company LLC, a New York based cryptocurrency exchange and trust company, to act as custodian of the bitcoin held in the fund. “As a New York Trust company we are required to store digital assets in a trusted, safe and compliant manner and will employ those principles to help 3iQ manage this innovative fund.”

Pye announced plans to refile the bitcoin fund’s prospectus as soon as possible. With the syndication of the offering, 3iQ hopes to have the fund listed and trading later this quarter.

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