Canada's first registered bitcoin investment fund manager dedicated to cryptocurrency investments has been approved by regulators.
The British Columbia Securities Commission (BCSC) granted Vancouver-based First Block Capital Inc. registration as an investment fund manager and an exempt market dealer in order to operate a bitcoin investment fund in Ontario and British Columbia.
"Cryptocurrency investments are a new and novel form of investing in Canada," said Zach Masum, manager, legal services, capital markets regulation, and leader of the BCSC's Tech Team in a statement. "We have seen from the market and from investors that there is a strong appetite for access to these kinds of investments. This first registration allows access to bitcoin investments, while providing the BCSC with unique mechanisms to monitor operations in a rapidly developing area."
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The BCSC launched a Tech Team in January, 2017, as part of its fintech outreach initiative to help B.C.-based fintech and technology companies understand their securities regulatory requirements. The Tech Team is also actively involved with the Canadian Securities Administrator regulatory initiatives, which support fintech businesses looking to launch new products in Canada.
Cryptocurrency investments raise risks that are different from traditional asset classes, including the cybersecurity risks inherent in dealing with digital currencies, which relate not only to the registrant, but also to the bitcoin fund's custodian, a third party chosen to facilitate the safekeeping and exchange of bitcoins, says the BCSC.
First Block Capital launched the Canadian Bitcoin Trust last July and provides accredited investors exposure to the price of bitcoin through an open-ended unit trust fund.
The conditions of registration imposed on First Block Capital allow the firm to operate under the present regulatory framework, while allowing regulators to evaluate the identified risks of this new type of investment fund type.