Cryptocurrencies offer an alternative route for building and storing wealth. While directly holding these digital assets is a popular option, investors are also clamoring for financial products such as cryptocurrency exchange-traded funds (ETFs).
“There is a high demand for a Bitcoin product that has all the features that people love about ETFs — that they trade on an exchange, that they’re liquid,” Ross Mayfield, investment strategy analyst at Robert W. Baird & Co., told Bloomberg in mid-2021.
Interest has only increased since then — in mid-2023, Sean Farrell, head of digital asset strategy at Fundstrat, said that growing demand in the market for Bitcoin ETFs has the potential to surpass the precious metals ETF market at some point.
‘Bitcoin ETF eventually could become >$300 billion category,’ he said in a note to investors.
Canada approved the first pure-play Bitcoin ETFs for trade on the TSX in early 2021. These Canadian cryptocurrency ETFs allow investors to place returns in tax-sheltered accounts like tax-free savings accounts or registered retirement savings plans.
The story is different in the US, where eight crypto ETFs were awaiting approval from the US Securities Exchange Commission (SEC) as of July 31, 2023. The federal agency is seemingly dragging its feet on approving these applications because of a lack of regulatory framework to govern crypto exchanges, as well as a perceived need for greater investor protections. This has prompted fund issuers to get creative with workaround ETFs that offer Americans exposure to crypto-linked equities.
Two major decisions before the SEC may or may not have — depending on who you ask — a big influence on the potential for a US Bitcoin ETF market: Grayscale’s legal challenge to the SEC’s refusal to allow it to convert its Grayscale Bitcoin Trust (OTCQX:GBTC) into an ETF, and BlackRock’s (NYSE:BLK) June filing of an application to launch the iShares Bitcoin Trust.
While investors hold their collective breath in anticipation of pure-play cryptocurrency ETF launches in the US market, it’s worth taking a look at the currently available Canadian cryptocurrency ETFs. The list below includes 11 options on the market, and all data presented was current as of July 28, 2023.
1. Purpose Bitcoin ETF (TSX:BTCC)
Assets under management: C$1.1 billion
Billed as the first physically settled Bitcoin ETF, the Purpose Bitcoin ETF launched in February 2021 and is backed by Bitcoin. The fund allows investors to add and sell Bitcoin with no digital wallet required.
Hosted by Canadian investment company Purpose Investments, the Purpose Bitcoin ETF is backed by 27,675.39 Bitcoins and has a management expense ratio of 1 percent.
2. Purpose Ether ETF (TSX:ETHH)
Assets under management: C$249.6 million
Launched in April 2021, the Purpose Ether ETF is the world’s first direct-custody Ether ETF.
Ethereum is the most widely used blockchain technology, and Ether, the digital currency of this platform, is the second largest cryptocurrency after Bitcoin. Evolve ETFs and CI Global Asset Management claim to have also launched the first Ether ETF on the same day, but it looks like Purpose Investments was the first to make an announcement.
The Purpose Ether ETF offers investors exposure to the daily price movements of physically settled Ether tokens through either Canadian dollar hedged units, Canadian dollar non-currency hedged units or US dollar units. The management fee is 1 percent.
3. Evolve Bitcoin ETF (TSX:EBIT)
Assets under management: C$108.68 million
Evolve ETFs partnered with cryptocurrency experts, including Gemini Trust Company, CF Benchmarks, Cidel Bank & Trust and CIBC Mellon Global Services, to launch the Evolve Bitcoin ETF. The fund has a management fee of 0.75 percent.
Launched a week after the Purpose Bitcoin ETF, its holdings of Bitcoin are priced based on the CME CF Bitcoin Reference Rate, a once-a-day benchmark index price for Bitcoin denominated in US dollars.
4. Evolve Ether ETF (TSX:ETHR)
Assets under management: C$50.36 million
The Evolve Ether ETF offers investors an easier route to investing directly in Ether. The fund’s holdings of Ether are priced based on the CME CF Ether-Dollar Reference Rate, a once-a-day benchmark index price for Ether denominated in US dollars. As with the Evolve Bitcoin ETF, the Evolve Ether ETF has a management fee of 0.75 percent.
5. Evolve Cryptocurrencies ETF (TSX:ETC.U)
Assets under management: C$20.22 million
The Evolve Cryptocurrencies ETF launched in September 2021 as the first multi-cryptocurrency ETF, providing combined exposure to both Bitcoin and Ether. This product from Evolve ETFs allows investors to diversify their crypto portfolios and provides indirect exposure to the two coins, weighing them by market capitalization and rebalancing its holdings on a monthly basis.
While this ETF has no management fee, the underlying funds that hold both Bitcoin and Ether have management fees of 0.75 percent of net asset values, plus applicable taxes.
6. CI Galaxy Bitcoin ETF (TSX:BTCX.B)
Assets under management: C$272.23 million
Launched in March 2021, the CI Galaxy Bitcoin ETF was born out of a partnership between cryptocurrency leaders Galaxy Fund Management (GFM) and CI Global Asset Management. GFM is part of the management arm of Galaxy Digital, a diversified financial services firm with a focus on the digital assets and blockchain technology sector.
The ETF’s objective is to give investors exposure to Bitcoin via an institutional-quality fund platform. At 0.4 percent, this fund boasts the lowest management fee possible of all the crypto funds on the market.
7. CI Galaxy Ethereum ETF (TSX:ETHX.U)
Assets under management: C$308.26 million
CI Global Asset Management suggests that “owning Ether is similar to owning a basket of early-stage, high-growth technology stocks.” The CI Galaxy Ethereum ETF has blown the competition out of the water in terms of assets under management.
Some of that may be due to its ultra-low management fees, which were at zero for nearly the first two months following the fund’s April 2021 launch date. After June 15, 2021, its management fees increased to 0.4 percent — that’s in line with the CI Galaxy Bitcoin ETF, but still well below those of its competitors.
8. 3iQ CoinShares Bitcoin ETF (TSX:BTCQ)
Assets under management: C$101 million
Launched in March 2021, the 3iQ CoinShares Bitcoin ETF tracks the price movement of Bitcoin in US dollars terms, and holds its Bitcoin assets in cold storage with no digital wallet required. This ETF comes with a management fee of 1 percent.
9. 3iQ CoinShares Ether ETF (TSX:ETHQ)
Assets under management: C$27 million
Following the success of its Bitcoin ETF, 3iQ Digital Asset Management launched its CoinShares Ether ETF in April 2021. This fund has a similar objective, offering exposure to Ether and its daily US dollar price movements. It has a management fee of 1 percent.
10. Fidelity Advantage Bitcoin ETF (TSX:FBTC)
Assets under management: C$71.6 million
The newest Bitcoin fund on this list, the Fidelity Advantage Bitcoin ETF launched in November 2021. It offers the security of Fidelity’s in-house storage services. Like the CI Galaxy funds, the Fidelity Advantage Bitcoin ETF has an ultra-low management fee of 0.4 percent.
11. Fidelity Advantage Ether ETF (TSX:FETH)
Assets under management: C$1.4 million
Following the successful launch of its Bitcoin fund, Fidelity brought its Ether ETF to market in September 2022. FETH also has a management fee of 0.4 percent.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
