NEO Exchange is helping high net worth investors in Canada hold Bitcoins in their registered accounts. This will include registered tax-free savings accounts and registered retirement savings plans. Beginning this week, investors will be able to purchase First Block Capital Bitcoin Trust. The open-ended fund, which runs on trading platform NEO Connect, was launched last year for accredited investors. Aequitas Innovations Inc designed the trading platform.
Is This the Alternative to Bitcoin ETF?
First Block Capital Bitcoin Trust will trade under the FBCBT symbol. Using NEO Connect, the investors will be able to purchase and redeem this fund like an exchange-traded fund. Also, they will be able to allocate units of the fund into their tax-free savings accounts and registered retirement savings plans.
The fund was initially a private placement fund that was open only to a set of accredited investors. It helped them get Bitcoin market exposure, without holding BTCs by themselves. It worked exactly like an ETF as it allowed investors to make Bitcoin investment without holding any coins themselves. However, the company’s offerings faced some problems when the advisers suggested that their 30-day redemption window was too long.
Changes Due to Redemption Policies
Sean Clark, the co-founder, and CEO of First Block Capital informed about the changes in an interview with The Globe and Mail. He said:
“The longer redemption time frame was a feature that we felt really hurt the fund and the reason why we didn’t reach hundreds of millions [in assets] coming out of the gate. Investors wanted more liquidity in this sector, and we are pleased to now be able to offer advisers daily trading capabilities for those discretionary accounts.”
A steady surge in institutional investment has been witnessed in the cryptocurrency sector off late. The premier cryptocurrency in the market, Bitcoin, touched $20,000 in December 2017 but has since dropped by around 70%. The falling valuation of the coin’s value has discouraged several retail investors. However, institutional money is still coming into the market. If some more regulatory clarity is achieved in this sector, it is likely that millions of dollars will flow into the industry.
As noted by Clark:
“Goldman [Sachs] is still bullish on bitcoin; they are not walking away from it, but rather switching their focus. They understand the sequence of events that need to happen, and a custody solution needs to exist in order for this asset class to flourish.”