March 11 – 17, 2019 | 3iQ/OSC Application for Hearing, CBOE Bitcoin Futures & More Crypto News

3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.


3iQ Corp. Files Application for Hearing and Review of “The Bitcoin Fund”

March 15 – 3iQ Corp. has filed an application for Hearing and Review of the Decision of the Director to refuse to issue a receipt for the prospectus of “The Bitcoin Fund”. 3iQ had publicly filed a non-offering preliminary prospectus for The Bitcoin Fund on October 31, 2018. The decision of Raymond Chan, Acting Director of the Investment Funds & Structured Products Branch of the Ontario Securities Commission (OSC) to refuse to issue a receipt for the prospectus of 3iQ’s The Bitcoin Fund was published on February 15, 2019. According to the OSC’s own regulatory process, 3iQ needed a formal rejection of the prospectus from the Director in order to later appeal at a public hearing in front of a panel of OSC Commissioners.

The company is preparing to go to a public hearing in front of three Commissioners of the OSC to address concerns of public interest, custody, liquidity and auditability. The date of the hearing is yet to be determined.

Read the full article here.


Canadian Regulators Seek Input for Crypto Exchange Regulatory Framework

March 14 – Canadian capital market regulators are asking industry participants for inputs on how regulatory requirements can be tailored for digital asset exchanges that operate in Canada. The joint consultation paper was published by the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) on March 14, 2019. “We must adapt to innovation, and provide clarity to the market about how regulatory requirements might best be tailored and applied to these unique business models, while maintaining investor protection,” said regulators in the paper.

The paper notes that Canadian regulators view digital asset and cryptocurrency platforms as being “hybrid” in nature, meaning that the platforms can perform many functions for one or many different market participants. For example, some platforms may operate as a cryptocurrency exchange, but also offer additional functions for custody or offer alternative trading systems. Other issues surrounding securities classification also means that cryptocurrency exchanges could be subject to securities or derivatives regulatory requirements if they list certain digital assets that classify as such. The paper specifically notes that many “utility tokens” have at some point been involved in the distribution of securities, through the form of investment contracts. According to the paper, no cryptocurrency exchanges in Canada are authorized to operate as a marketplace or dealer of securities.

Read the full article here.

Read the consultation paper from the CSA/OSC here.


CME Plans “No Change” for Bitcoin Futures After CBOE Pulls Back

March 15 – The Chicago Mercantile Exchange (CME) has confirmed that it has no plans to change its bitcoin futures contracts. The news follows the Chicago Board and Options Exchange (CBOE) and CBOE Futures Exchange (CFE) decision on March 14th to not add a bitcoin (XBT) futures contract for trading in March 2019. This means that after the last currently traded futures expire in June, the (XBT) futures market will stop at the CFE until new futures get listed again. “CFE is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading. While it considers its next steps, CFE does not currently intend to list additional XBT futures contracts for trading,” said the CBOE in a notice to investors.

Both the CBOE and CME introduced bitcoin futures contracts in late 2017. Despite both being pegged to spot bitcoin prices, the CBOE’s (XBT) futures contract volumes have been dwarfed in comparison to those at the CME (BTC). A possible reason for the difference in volumes could be that the CME bitcoin futures (BTC) use a more diverse price discovery method which is an aggregate price of several spot markets, rather than the CBOE which depends on one price provider.

Read the full article here.


SEC Could be Chasing Billions out of the US Economy with no Bitcoin ETF Approval

March 15 – Cryptocurrency and other digital asset investors have long-awaited the approval of a North American bitcoin exchange-traded fund (ETF) which could greenlight the entrance of new retail and institutional investments into the sector. The Securities and Exchange Commission (SEC) has rejected several bitcoin ETF proposals from different issuers throughout 2018, citing issues surrounding custody, price discovery, and price manipulation among other factors. The lack of a tradeable bitcoin ETF on a North American exchange has had cryptocurrency investors flocking to unregulated exchanges – many of which are based overseas. Binance, a leading cryptocurrency exchange founded by the Chinese entrepreneur Changpeng Zhao, had significant profits in 2018 and indirectly paid out almost $500 million USD to holders of its exchange token, Binance Coin. Binance is just one of hundreds of cryptocurrency exchanges around the world that continue to operate outside of the US and its federal securities regulations.

Some industry participants could be happy to see that the SEC is dragging its feet on approving a bitcoin ETF, as it allows cryptocurrency exchanges to further develop their businesses and accumulate more market share. The approval of a bitcoin ETF still remains up in the air so far in 2019 with no new significant announcements coming from the SEC.

Read the full article here.


IBM Enters the Crypto Custody Market With Technology Designed for Banks, Other Institutions

March 12 – IBM has quietly entered the crypto custody market through its private cloud and encryption technologies. Sometime near the end of March, Shuttle Holdings, a New York-based investment firm, will launch the beta version of its custodial solution for cryptoassets which is built on IBM’s technology. While both companies won’t directly be storing the cryptoassets themselves, the custodial solution will be a tool for other entities to use. Potential users could be banks, brokers, family offices, investments funds, crypto exchanges, and other individual investors.

IBM had showcased the technology at its “Think 2019” conference in February 2019 in San Francisco. The Digital Asset Custody Service (DACS) is not same as some of the “cold storage” wallets widely used by the industry already; in fact, it appears to add an additional security layer on top of them. The technology is built on a hardware security module (HSM), which is essentially a “lockbox” that insures the safety of the private keys for wallets in a “tamper-proof” environment. “There are always trade-offs between security and efficiency, but we do not utilize a traditional cold storage system. Instead, we keep keys at rest encrypted in multiple layers as data blobs so that an organization can store these backups using their pre-existing disaster recovery and backup processes and media,” said Brad Chun, Shuttle Holdings’ chief investment officer.

Read the full article here.


3iQ Global Cryptoasset Fund: Price as at March 15, 2019

3iQ is the first regulator approved multi-cryptoasset portfolio manager in Canada, providing accredited investors with exposure to bitcoin, ether, and litecoin through its 3iQ Global Cryptoasset Fund.


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This Weekly Cryptoasset Newsletter is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by 3iQ Corp (“3iQ”). Investors should determine for themselves whether a particular service or product is suitable for their investment needs or should seek such professional advice for their particular situation.3iQ Corp. makes no representation or warranty to any investor regarding the legality of any investment, the income or tax consequences, or the suitability of an investment for such investor. All content is original and has been researched and produced by 3iQ unless otherwise stated therein. No part of the content may be reproduced in any form, or referred to in any other publication, without the express written permission of 3iQ. All statements made regarding companies, securities or other financial information contained in the content or articles relating to 3iQ are strictly beliefs and points of view held by 3iQ and are not endorsements of any company or security or recommendations to buy or sell any security. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. By visiting and/or otherwise using the 3iQ website in any way, you indicate that you understand and accept the terms of use as set forth on the website and agree to be bound by them. If you do not agree to the terms of use of the website, please do no access the website or any pages thereof. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with 3iQ with respect to any linked site or its sponsor, unless expressly stated by 3iQ. Any such information, products or sites have not necessarily been reviewed by 3iQ and are provided or maintained by third parties over whom 3iQ exercises no control. 3iQ expressly disclaims any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites. The information contained herein, while obtained from sources believed to be reliable, is not guaranteed as to its accuracy or completeness and confers no right on purchasers. Past performance of cryptoassets is not indicative of future performance and should not be used to forecast any return that an investor may realize.

2019-03-19T17:34:52-05:00 March 19th, 2019|