Bitcoin on the TSX: Open the Floodgates

The event itself is historic for two main reasons:

• The regulatory bodies responsible for asset management are open to working with asset fund managers to bring in alternative asset classes such as well established cryptocurrencies.
• The Bitcoin Fund QBTC.U is the first Bitcoin fund to be listed on a major global stock exchange.

The Significance of the TSX

Cryptocurrency is still new to the world, only having come into existence eleven years ago on January 3rd, 2009. It is quite remarkable to think that a completely unregulated, and notorious asset such as Bitcoin, will now be traded as a fund by those with access to the Toronto Stock Exchange. The total market cap of the TSX is beyond 3 trillion dollars as of September 2019, trading more than 97 billion dollars in volume every month, making it the ninth-largest stock market in the world.

The Bitcoin Fund (QBTC.U) is simply an Exchange Traded Product (ETP) that tracks the underlying asset. This means that traders on the TSX are not buying and selling actual bitcoin like they are on regular cryptocurrency exchanges. This is important to understand, as it indicates the level of comfort the regulators have in listing an actual cryptocurrency for trading. What it does mean is that while investors get familiar with bitcoin, cryptocurrency, in general, gets exposure, paving the road for further adoption.

From the perspective of cryptocurrency adoption, this is the perfect small, calculated step to be taken by investors and regulators. The goal is to increase exposure to the underlying assets, and now, investors can add bitcoin to their portfolios.

What this means for Cryptocurrency

Cryptocurrency adoption is a multinational effort. Although the effort is not always coordinated, planned, or successful, there have been many small wins along the way. Bitcoin seems to be acting as the acid test when it comes to adopting crypto assets as investment products. Until recently, all cryptocurrencies have been kept on the fringes, or edges of financial markets. This distancing has limited and slowed the growth of cryptocurrency adoption as money, and as an investment. In order to see global adoption, we’re going to need to see Bitcoin, as well as a collection of other cryptocurrencies be accepted into the centuries old international stock markets.

Although it is unlikely that we will see an Ethereum or Ripple ETP in our near future, the introduction of The Bitcoin Fund does beg the question of whether or not the regulatory floodgates have been opened. The regulatory framework that has been established by 3IQ, can now be followed by other fund managers, for other cryptocurrencies, in other countries.