Canada is making a name for itself in the complex and profitable world that is cryptocurrency investing.
First Block Capital has released details on its FBC Bitcoin Trust (FBT), a first-of-its-kind investment fund dealing exclusively in the cryptocurrency Bitcoin. Investors can now obtain exposure to Bitcoin and make money from the fund without actually having to navigate the sometimes confusing and unsecured world of crypto-wallets and databases. Earlier this summer First Block announced their Canadian Bitcoin Trust.
First Block also announced that it has been granted registration as an investment fund manager in Ontario and British Columbia, another important step forward as it becomes the first fund dedicated to cryptocurrency investments. This move shows how Canada is becoming a major player in the global cryptocurrency world.
It was still a bit difficult for Sean Clark, the founder of First Block Capital, to explain to regulatory bodies that crypto is the right way to step into the future.
“It took six months, a ton of money and a ton of due diligence. It was very difficult,” Clark explains regarding his discussions with regulators. “The commissions needed to be comfortable with who we are and what we were doing. Ultimately it was our experience as technologists that made us differentiate from other finance firms.”
“Two non-finance guys created first regulated investment firm for crypto in Canada.”
Clark came from the well-known shoes.com enterprise, which at one point was the best-performing e-commerce site in Canada.
The FBT is a trust that tracks the market price of Bitcoin, which currently sits at $3,709 USD. Bitcoin is extremely volatile though, as it can often rise or fall double-digit percentage points in one day. In fact, over the span of September 15 to 18, Bitcoin jumped $1,000 in value.
First Block warns customers about this risk involved in cryptocurrency very clearly and realizes that investors still want to be a part of the wave. If you want proof, look at HIVE Blockchain Technologies Ltd.; the company just launched on the Toronto Stock Exchange three days ago and is among the first ever blockchain firms on an exchange. It launched at $0.30 CAD a share and now sits at $2.01.
“Bitcoin and crypto were basically reserved for deep technologists and libertarians, but with the success of HIVE, we’ll see a host of new companies geared towards this space,” says Clark. “Investors just want to gain exposure to that class.”
And what a class it is. The market cap of all cryptocurrencies in early 2017 was around $30 billion. Earlier this month, that total value was reported at $150 billion.
“I think this is going to be a trillion dollar asset class,” says Clark. “As blockchain use cases are developed, the digital currency asset class is going to grow wildly. It is a redistribution of wealth and it is absolutely an inflection point in the digital age.”
As more investors enter cryptocurrency, the value is driven up. The way Bitcoin works is similar to how gold functions in our society—there is only a finite amount of both. As more of both are mined and bought, the price is driven up. Market and media hype can even influence Bitcoin, as more people learn about it and rush to get into this “hot” market. A trust could help even things out.
“We’re going to help stabilize the market. There’s more money coming in through the fund, so we’ll get big cheques and buy Bitcoin,” says Clark. “It will drive the price up and we won’t sell it unless someone wants to redeem it. It’s a self-fulfilling fund.”
However, not anyone can hop in and invest with First Block’s FBT. You have to be an accredited investor to buy into FBT, which means it’s only for seasoned investment vets who want a regulated fund to buy. This level of separation removes any kind of risks associated with the actual process of obtaining and holding Bitcoin. A Swiss Bitcoin custodian company, Xapo GmbH, secures and holds the cryptocurrency, and Clark calls them the “Fort Knox of Bitcoin.”
Clark is off on a month-long world tour to bring attention to the First Block FBT and meet with interested investors from several countries. As word spreads and more regulatory commissions learn about First Block and the aspect of cryptocurrency funds, there is no doubt the aspect of investing regular currency into a digital asset will become as regular as index funds or trading resource futures.