Cryptocurrency investing has become quite popular in recent years since Bitcoin started breaking past all expectations and reaching unbelievable valuations.
The rise of Bitcoin Exchange-Traded Funds (ETFs) has made it easier for Canadians to invest in Bitcoin without worrying about signing up to cryptocurrency exchanges, using cold wallets, or protecting public keys.
Are you thinking of what the best Bitcoin ETF in Canada is and how you can invest in it?
This post will list down and discuss the best Bitcoin ETFs that are currently available for Canadians to buy on the Toronto Stock Exchange (TSX) to help you make a well-informed decision about investing in the cryptocurrency space.
ETFs are funds created by investment firms to typically provide investors with an easier way to invest in a group of diversified securities. Traditionally, ETFs diversify the funds into several asset classes to provide investors with relative security for their investment capital.
If the valuation of one constituent asset held by the fund declines, relative stability in the value of the rest of the securities held by the fund can offset losses for the investors.
Cryptocurrency ETFs like Bitcoin ETFs operate differently from traditional ETFs. Rather than investing in a group of securities, Bitcoin ETFs invest in physically settled Bitcoin units and stores the cryptocurrency for you in cold storage.
Buying a Bitcoin ETF means that you are paying the investment firm managing the fund to buy and store Bitcoin for you, so you don’t have to worry about the process of signing up to a cryptocurrency exchange or storing your Bitcoin safely.
Minus the management fee for the ETF, you get to enjoy the returns from your Bitcoin as you would by buying the cryptocurrency itself, without directly buying Bitcoin.
The Best Bitcoin ETFs in Canada
Buying and storing cryptocurrency directly is not something that everybody has the time for. It comes with several challenges, including considerable delays, security issues, and storage issues. Investing in the best Bitcoin ETF in Canada, on the other hand, is a more straightforward affair.
If you already have a brokerage account, you can simply purchase the ETF you choose and store it in an account that you get to choose. An important thing to remember is that Bitcoin ETFs are not the same as blockchain ETFs.
Bitcoin ETFs allocate 100% of their assets under management to purchase Bitcoin units and place them in cold storage. Blockchain ETFs are funds that invest in companies that use or develop blockchain technology.
Additionally, Bitcoin ETFs carry a higher degree of capital risk. Since the funds allocate 100% of their AUM into Bitcoin, the fund’s valuation depends heavily on the price of the underlying commodity. Bitcoin is a volatile asset that is prone to significant intraday price changes.
It means that you should not invest in Bitcoin ETFs in Canada unless you can stomach more substantial capital risk.
Cryptocurrency ETFs were first introduced to the TSX in 2021, and it is a growing list right now. At writing, there are five Bitcoin ETFs that have been approved for trading on the TSX in Canada.
1. Evolve Bitcoin ETF
Here are key facts and figures for Evolve Bitcoin ETF as of August 31, 2021:
- Ticker: EBIT, EBIT.U
- Inception date: February 17, 2021
- Assets Under Management (AUM): $114.307 million
- Management Fee: 0.75%
Evolve Bitcoin ETF (EBIT) is a Bitcoin ETF available to Canadians that they can buy and hold in registered accounts like the TFSA and RRSP, and non-registered investment accounts. EBIT ETF’s management fee is 0.75%, slightly lower than BTCC ETF’s management fee.
Despite launching just a little while after the world’s first cryptocurrency ETF and offering lower management fees, Evolve Bitcoin ETF has not enjoyed the same level of growth.
Investors will have to wait until February 2022 to get access to information for the fund’s performance because that is when it has traded for a year on the TSX. EBIT ETF allocates all its money to holding Bitcoin, making it a financial instrument that carries higher capital risk for your portfolio.
2. Fidelity Advantage Bitcoin ETF
Key facts about Fidelity Advantage Bitcoin ETF as of December 7, 2021:
- Ticker: FBTC, FBTC.U
- Inception date: November 30, 2021
- Assets Under Management (AUM): $2.5 million (as of November 30, 2021)
- Management Fee: 0.40%
Fidelity Advantage Bitcoin ETF (FBTC) is the latest Bitcoin ETF to become listed on the Canadian stock market. Offered by Fidelity Investments, it is the first time an investment manager affiliated with the Investment Industry Regulatory Organization of Canada (IIROC) has offered Bitcoin trading and custodian services for Canadian investors.
FBTC ETF is available in a Canadian dollar-denominated and US dollar-denominated version under the ticker symbols FBTC and FBTC.U, respectively.
The fund allocates its entire resources to invest in and hold physical Bitcoin. FBTC ETF provides you with returns based on the performance of Bitcoin price movements.
The fund boasts a low management fee of 0.40% but it has an expected MER capped at 0.95%, subject to change without notice, according to the fund manager. Launched on November 30, 2021, the performance metrics for the fund are as yet unavailable. You can expect to see its performance metrics in November 2022 when the fund completes a year of trading on the TSX.
3. CI Galaxy Bitcoin ETF
Here are key facts and figures for CI Galaxy Bitcoin ETF as of August 30, 2021:
- Ticker: BTCX.B, BTCX.U
- Inception date: March 5, 2021
- Assets Under Management (AUM): $356.830 million
- Management Fee: 0.40%
CI Galaxy Bitcoin ETF (BTCX) was launched by CI Investments in partnership with Galaxy Digital Capital Management LP and lets you invest in Bitcoin with the lowest expense the Bitcoin ETFs in Canada with a management fee of just 0.40% while offering similar features and benefits of other Bitcoin ETFs in Canada.
Canadian investors can purchase and hold this ETF in a TFSA or RRSP or even a non-registered investment account. BTCX ETF has an MER that will not exceed 0.95% according to the CI Global Asset Management website.
Investors will not have access to information regarding its performance until it has traded on the TSX for a year in March 2022.
4. Purpose Bitcoin ETF
Here are key facts and figures for Purpose Bitcoin ETF as of August 31, 2021:
- Ticker: BTCC, BTCC.B, BTCC.U
- Inception date: February 11, 2021
- Assets Under Management (AUM): $1.32 billion
- Management Fee: 1.00%
Purpose Bitcoin ETF (BTCC) is the first-ever cryptocurrency ETF worldwide. The ETF quickly became popular since its launch in February 2021, exceeding $1 billion in assets under management within 30 days of trading.
BTCC ETF became the first fund to store all of its underlying assets in cold storage. You can invest in the financial instrument in TFSAs and RRSPs as well as non-registered accounts.
The management fee for BTCC ETF is 1.00%, and the fund’s expense ratio cannot exceed 1.50%. Investors will not have access to comprehensive performance data until it has traded for a year on the TSX by February in 2022.
Like the other funds on this list, BTCC is a financial instrument that comes with a higher degree of capital risk since it allocates all its money to holding one digital asset, and the fund does not diversify across other asset classes or other cryptocurrencies.
You can learn more about the first Bitcoin ETF through my BTCC ETF review.
5. 3iQ CoinShares Bitcoin ETF
Here are key facts and figures for 3iQ CoinShares Bitcoin ETF as of August 31, 2021:
- Ticker: BTCQ, BTCQ.U
- Inception date: March 31, 2021
- Assets Under Management (AUM): $1.202 billion
- Management Fee: 1.00%
3iQ CoinShares Bitcoin ETF (BTCQ) is another Bitcoin ETF available to Canadians. 3iQ Digital Asset Management partnered with CoinShares to create this ETF. The fund comes with a management fee of 1.00%, but its MER cannot exceed 1.25%. You can invest in the ETF using a TFSA or RRSP and a non-registered account.
Like BTCC ETF, 3iQ CoinShares Bitcoin ETF has enjoyed rapid growth since it started trading. It became the fastest Bitcoin ETF to cross the $1 billion AUM mark by crossing it within three weeks.
Investors will have to wait until March 2022 to get access to information regarding its performance and returns.
6. Ninepoint Bitcoin ETF
Here are key facts and figures for Ninepoint Bitcoin ETF as of August 31, 2021:
- Ticker: BITC, BITC.U,
- Inception date: January 27, 2021
- Assets Under Management (AUM): $94.169 million
- Management Fee: 0.70%
Ninepoint Bitcoin ETF (BITC) used to be a closed-end fund that became available to trade for Canadians on January 27, 2021, before it converted into an ETF. That is why BITC ETF is not considered the first Bitcoin ETF because it only recently converted into an ETF.
Ninepoint Partners, the investment firm that launched BITC is marketing the fund as an environmentally friendly and carbon-neutral way to invest in Bitcoin.
Since high carbon emissions and the environmental impact of cryptocurrency mining is a major obstacle for the cryptocurrency world, it gives Ninepoint Bitcoin ETF an edge over the other Bitcoin ETFs.
Ninepoint achieves this goal by using a portion of its management fee to offset the carbon produced by the Bitcoin held in BITC ETF.
Are Bitcoin ETFs Safe?
All the Bitcoin ETF providers are investment firms that are regulated by regulatory bodies in Canada with the right coverage to protect your investment capital. You can enjoy the peace of mind that your investments are managed by top management firms that are committed to keeping your capital safe.
Bitcoin ETF providers go to great lengths to ensure safe and secure storage for your cryptocurrency holdings with the investment firms by holding the cryptocurrency in cold storage, providing additional security, and reducing the chances of your Bitcoin getting lost due to human error or data breaches.
In terms of safety for the money you invest, Bitcoin ETFs, like the underlying commodity, are speculative and volatile. The ETFs offer the potential for high rewards but come with significantly greater risk than investing in other ETFs.
If you choose to invest in Bitcoin ETFs, you should allocate funds to it understanding the risks that come with venturing into this asset class.
There are several benefits of buying Bitcoin ETFs in Canada, but it comes with a few drawbacks. Understanding the pros and cons of buying Bitcoin ETFs in Canada can help you determine whether investing in a Bitcoin ETF would suit your portfolio.
This section of my guide to the best Bitcoin ETF in Canada will discuss the benefits of holding a Bitcoin ETF:
- Store In Registered Accounts: Cryptocurrencies are currently not a regulated asset class. However, Bitcoin ETFs are a regulated security that lets you get exposure to Bitcoin in a registered investment account like a TFSA or RRSP without worrying about compromising the Canada Revenue Agency’s (CRA) rules on eligible investments. Holding a Bitcoin ETF in a TFSA or RRSP could help you reduce your tax liabilities on any returns from your investment in the assets and keep more of your income from them.
- Convenience and Liquidity: Canadian Bitcoin ETFs make it easier for you to invest in Bitcoin by eliminating the process of signing up with a cryptocurrency exchange or worrying about managing safe storage for your holdings. Additionally, Bitcoin ETFs are a far more liquid asset that you can easily buy and sell without lengthy waiting times – a problem you can undoubtedly face if you invest directly in Bitcoin through a cryptocurrency exchange.
- Safety and Security: The investment firms offering Bitcoin ETFs store their holdings in physically settled Bitcoin in cold storage to eliminate the risk of hacking, data breaches, or human error causing the loss of your Bitcoin. Additionally, the Bitcoin ETFs are regulated securities. It means that your capital invested in the fund is covered by Canadian Investor Protection Fund (CIPF).
There are some drawbacks that come with investing in Bitcoin ETFs in Canada. This section of my guide to the best Bitcoin ETF in Canada will cover them:
- Higher Fees: Bitcoin ETFs in Canada come with more expensive management fees than many low-cost ETFs in Canada. Two of the largest Bitcoin ETFs charge a 1.00% management fee. The total cost of holding a Bitcoin ETF will only go higher once you include the higher Management Expense Ratio (MER).
- Reduced Control Over Your Holdings: Investing in an ETF means that you are essentially paying the ETF provider to manage your capital held by the firm on your behalf. It means that the ETF’s management will decide how to allocate your funds and you cannot transfer any of the underlying Bitcoin to your private wallet if you want to store your holdings yourself.
Before the first Bitcoin ETF came along, people interested in cryptocurrency investing had to sign up to a crypto exchange platform and purchase the commodity from those exchanges.
Many investors find it more convenient to directly buy and hold Bitcoin themselves but have to contend with the challenges of directly owning the cryptocurrency. Other investors find it easier to gain exposure to Bitcoin through an ETF that handles everything for them.
The problem with buying Bitcoin directly through cryptocurrency exchanges is that these platforms are notorious for being buggy, slow to process payments and transactions, and have been vulnerable to hackers in the past.
If you decide to buy Bitcoin through a cryptocurrency exchange, you might have to wait several days for your transfer to be approved before you can start trading using the money in your account.
Suppose that you know how volatile Bitcoin prices are and you are trying to quickly buy Bitcoin when its price is rising so that you can sell it before the price decline and walk away with the profits. In that case, any delays caused by the crypto exchange could result in you losing the opportunity to capture the profits.
Bitcoin ETFs are a more liquid asset that you can easily buy and sell through your existing brokerage account. You don’t need to create an account with a crypto exchange or wait a long time for your payments to be processed. Theoretically, it is possible for you to make quick trades with Bitcoin ETFs to capture profits.
Bitcoin is the most popular cryptocurrency worldwide and is attributed to be the first, but there are several other cryptocurrencies that have become popular over the years. Ether is the second-largest cryptocurrency worldwide, and it is used on the Ethereum blockchain network.
There are other cryptocurrency ETFs available in Canada, but they are limited to either Bitcoin or Ether at writing.
All the investment firms that offer the Bitcoin ETFs I have listed above also offer Ether ETFs or Ethereum ETFs, except for Ninepoint Partners. You can check out my post on the best Ethereum ETFs in Canada to learn more about them.
How To Buy Bitcoin ETFs in Canada
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Buying Bitcoin has become a lot easier ever since the first Bitcoin ETF in Canada launched in February 2021. You can quickly and cheaply invest in Bitcoin through these Bitcoin ETFs without facing the challenges and concerns that come with cryptocurrency investing through a crypto exchange.
It is difficult to determine which of the funds I have listed is the best Bitcoin ETF in Canada since the funds are still relatively new at the time of writing.
You can go for Purpose Bitcoin ETF (BTCC) if are interested in the first cryptocurrency ETF in the world purely because it was the first product to be introduced in the space.
CI Galaxy Bitcoin ETF (BTCX) is the ideal fund to go for if you want to go for a fund that offers the lowest management fee and MER since it charges a management fee of just 0.40% and comes with an MER capped at 0.95%.
Are you interested in investing directly in Bitcoin so that you can avoid management fees entirely and get better control over your cryptocurrency holdings? You can invest in Bitcoin through a crypto exchange like Wealthsimple Crypto available through Wealthsimple Trade.
Check out my Wealthsimple Crypto review to learn more about this crypto trading platform.