The Purpose Bitcoin exchange-traded fund (ETF) that launched on the Toronto Stock Exchange in mid-February has set off a chain reaction of competitors following suit. Funds once able to charge healthy premiums of 30 per cent or more than the price of Bitcoin itself are having to rethink their approach, with the largest—Grayscale Bitcoin Trust (GBTC)—announcing this week that it also plans to convert to an ETF.
GBTC’s move follows those of Canada’s Ninepoint Partners and CI, which announced plans to convert their Bitcoin funds to ETFs shortly after Purpose’s product started trading. The short-term success of Canada’s ETFs has many predicting the demise of closed-end funds like the one offered by New York-based Grayscale with US$38 billion in assets under management, which subjected investors to extended lockup periods, high fees and restrictions on who can get in. And it’s given observers––who’ve watched the Securities and Exchange Commission reject digital currencies for years––hope that a similar product might finally be approved in the U.S.