3IQ's $1.45bn Bitcoin Fund set for Nasdaq Dubai listing

The manager of the world's first Bitcoin fund to trade on a significant exchange is to list it on Nasdaq Dubai.

3iQ Corporation, which listed The Bitcoin Fund ETF on the Toronto Stock Exchange in April this past year, expects to commence trading the fund in Dubai within the existing quarter after gaining approval from the Dubai Financial Services Authority.

"We're targeting listing in the next or third week of May and trading by the finish of May," Frederick Pye, chairman and leader of 3iQ told The National. Listing the fund on a Middle East exchange will also help regarding trading times, as Bitcoin trades for 24 hours a day, seven days a week, he added.

The Bitcoin Fund started out trading on the Toronto STOCK MARKET in this past year, with $15 million of assets. By last Friday, it had a net asset value of $1.45 billion, according to the company's website.

Part of this is because of Bitcoin's incredible run-up in value during that period. In the 12 months following the fund's launch, Bitcoin increased almost eight-fold in value from just over $7,300 to a lot more than $57,000.

The other day, the world's biggest cryptocurrency hit an all-time high above $63,000 following a successful listing of shares in Coinbase, the world's second-biggest cryptocurrency exchange by volume. However, a sell-off over the weekend prompted by uncertainty over a potential US regulatory crackdown on cryptocurrencies pushed its value back down to $54,806 on Tuesday at 8.12am UAE time. Bitcoin now includes a market capitalisation of more than $1 trillion.

3iQ and its own lead manager Dalma Capital are targeting initial subscriptions "north of $200m" for the Nasdaq Dubai listing, Mr Pye said.

"But it could be increased in proportions. We expect it to be always a major offering."

Dalma Capital, located in the Dubai International Financial Centre, will now start a roadshow which will involve around three weeks of education and marketing of the fund, including a presentation by the Winkelvoss twins, cryptocurrency enthusiasts who provide custody services to 3iQ through their Gemini platform.

Following that, an additional three-week book-building process will take place where it'll court investors seeking to subscribe to the offering, chief executive Zachary Cefaratti said.

"That process will be occurring with us alongside various other institutions which have strong reputations in this area," he said.

Early-stage discussions have generated enthusiasm, especially from banks and wealth managers who have clients that are considering Bitcoin but who have not been able to provide direct investments through existing exchanges because of regulatory concerns, Mr Cefaratti said.

"What we've seen will there be is significant pent-up demand. There are a lot of investors who feel just like they've missed from this huge expansion of wealth which has happened in the rise of Bitcoin.

"During the last 11 years, Bitcoin has been the best-performing asset class in nine of these. People in this region have felt like they've been on the sidelines because they haven't had usage of something. The concern some persons have had is be it too late. But what we're seeing is it's still very early. Institutional adoption has only begun."

Several regulators around the world have continued expressing regulatory concerns about Bitcoin in addition to a number of the unlicensed funds used to promote cryptocurrencies. The UK's Financial Conduct Authority has prohibited trading in cryptocurrency derivatives, while Turkey the other day banned their use entirely. India is also reportedly considering a veto.

In america, at least eight applications have already been filed to the Securities and Exchange Commission to list Bitcoin exchange-traded funds by managers including Fidelity, Wisdomtree and First Trust/Skybridge but none have already been approved. A Bitcoin Investment Trust run by Grayscale Partners, which isn't exchange-traded, now has more than $40bn of assets under management, that it charges a 2 % annual fee, potentially generating $800m a year for the business.

Bitcoin ETFs "have to come", if only to reduce the costs investors pay to access the cryptocurrency through a regulated platform, Charles-Henry Monchau, chief investment officer of Geneva-based digital bank Flowbank said.

Last week's report on Coinbase at first gave it a $100bn market capitalisation, greater than New York STOCK MARKET owner International Exchange ($68bn) and Nasdaq ($26bn), However, a sell-off since has reduced its value to about $66bn by Monday.

The enthusiasm for the business demonstrates institutions are beginning to take cryptocurrencies and the blockchain technology on which they are built more seriously, Mr Monchau argued.

The Binance exchange has already tokenised Tesla shares enabling round-the-clock trading, he added.

"The banks should do something because they're not taking benefit of the crypto mania," Mr Monchau said. "And if this business commence to tokenise shares, they will eat their lunch."