By Alicia Maher
It was confirmed earlier this week that Fidelity Canada had created an exchange-traded fund (ETF) and a mutual fund specializing in Bitcoin, marking the first time such assets have been made accessible in Canada.
The funds are traded on the Toronto Stock Exchange under the entries FBTC and FBTC.U, and they are valued in Canadian and United States currencies, respectively. The Bitcoin ETFs offered by Fidelity strive to mirror the progress of the Bitcoin (BTC) spot price.
According to the company, Fidelity presently manages assets of CA $208 billion ($162.27 billion) in Canada.
The ETFs will be subject to an annual maintenance charge of 0.4% of their value. Because the assets are still in the early stages of development, operating expenditures and trading expenses are not yet known.
More than 98% of the Bitcoin bought by the funds is held in cold wallets, according to the company.
Benefits To Certain Account Holders
There are substantial ramifications for Canadian individual investors who create government-registered banks, such as the Tax-Free Savings Account (TFSA) and invest in Bitcoin exchange-traded funds (ETFs).
Securities kept in a TFSA are free from capital income tax responsibilities, as implied by the name of the account.
A TFSA’s yearly contribution maximum has fluctuated between CA $5,000 ($3,903) and CA $10,000 ($7,807) since 2009. Contributions from prior years that were not used are carried forward and added together to form a cumulative total.
All realized gains accumulated in the TFSA are reinvested back into the account, increasing the available contribution area.
Theoretically, if an investor buys ten thousand dollars of Bitcoin ETFs and sells them for twenty thousand dollars, any further capital growth from actually investing the entire twenty thousand dollars will be qualified for capital gains tax deferral rather than the ten thousand dollars invested initially.
Fidelity’s plan to provide a spot ETF in Canada merely adds gasoline to the fire, as one of the world’s biggest asset managers, with over $4 trillion in assets under management, is obliged to establish a service in Canada in order to meet consumer expectations.
SEC’s Reluctancy
Meanwhile, the Securities and Exchange Commission (SEC) is still debating whether or not to endorse a spot Bitcoin ETF, which many market experts believe will be a smash hit in the market.
VanEck’s spot Bitcoin ETF petition was just disapproved by the SEC, according to Cointelegraph, and Grayscale Ventures has expressed its displeasure with the SEC’s decision.
In a statement to SEC Secretary Vanessa Countryman, the administrator of the Grayscale Bitcoin Trust (GBTC), alleges that the SEC made a mistake by rejecting spot Bitcoin ETFs due to the fact the SEC has already authorized 3 such securities built on Bitcoin futures.
Bitcoin exchange-traded funds (ETFs) are not new to Canada. The ability to gain exposure to Bitcoin without having to go through the hassle of acquiring and holding it oneself would be a big triumph for investors, who would benefit from the move.
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