Katherine Ross

Monex is acquiring a majority stake in Canadian digital asset manager 3iQ.



Monex, a Japanese financial group, is a business that includes asset management, online brokerage and a crypto exchange.&nbsp;



It owns TradeStation in the US and <a href="https://www.monexgroup.jp/en/news_release/irnews/auto_20220309503078/pdfFile.pdf">bought</a> Coincheck back in 2018 after the crypto exchange was hacked. TradeStation was <a href="https://www.globenewswire.com/news-release/2011/04/21/444967/9656/en/TradeStation-Group-to-be-Acquired-by-Monex-Group.html">acquired</a> by Monex back in 2011.



No financial details of the deal were disclosed.



Read more: <a href="https://blockworks.co/news/notable-2023-crypto-mergers-acquisitions">The year’s most significant crypto M&amp;A deals — and how 2024 might shape up</a>



3iQ is best known for its bitcoin ETF listed in Canada; it’s one of a handful of bitcoin ETFs listed in Canada. However, it was the first to list the bitcoin fund back in 2020.&nbsp;



The fund reached approximately $755 million ($1 billion CAD) in assets in the weeks after its launch, but the numbers have since drifted down to around $100 million in assets.&nbsp;



<a href="https://blockworks.co/news/us-spot-bitcoin-etf">Blockworks previously reported</a> that the Ontario Securities Commission (OSC) signed off on the launch of bitcoin ETFs after it signed off on a workflow for daily liquidity, and became comfortable with investment-grade custody and infrastructure services.



“3iQ emerged as one of the first to introduce Bitcoin and Ethereum <a href="https://blockworks.co/tag/etfs">ETFs</a> on the Toronto Stock Exchange, cementing their role as market leaders. The company continued to break new ground, recently becoming the first globally to integrate Staking capabilities within an Ethereum ETF — a game-changing move for digital asset management,” a press release <a href="https://www.monexgroup.jp/en/news_release/irnews/auto_20231228510346/pdfFile.pdf">said</a>.&nbsp;



<a href="https://blockworks.co/tag/3iq">3iQ</a>, in 2022, even <a href="https://blockworks.co/news/canada-crypto-firm-considers-aiding-us-spot-bitcoin-etf-hopefuls">floated helping US spot bitcoin ETF hopefuls</a>. The US Securities and Exchange Commission is currently mulling over a dozen proposals for a spot bitcoin ETF in the US.&nbsp;



Read more: <a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf">January bound: SEC sets decision date on Ark, 21Shares bitcoin ETF</a>



“In response to a dynamic market trend where major crypto asset exchanges are diversifying into asset management, 3iQ is once again leading the charge. They plan to offer unparalleled asset management services on an outsourced basis, staying ahead of the curve and catering to the evolving needs of their clients,” the release said.



3iQ CEO Frederick Pye said, “with 3iQ&#8217;s expertise in crafting exceptional crypto asset products, we&#8217;re poised to bolster Coincheck&#8217;s offerings, especially for institutional investors.”



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Monex acquires majority stake in Canadian digital asset manager

Sebastian Sinclair

<div id="highlights-block_629e95e1b7483" class="highlights">
 <ul>
 <li>The fund manager&#8217;s Australian listing aims to track the firm&#8217;s Canada-based funds</li>
 <li>3iQ joins a growing list of fund managers offering similar products amid a market downturn and declining trading volumes</li>
 </ul>
 
</div>



3iQ has become the latest ETF manager to join the Australian market with two new listings on the Cboe Australia exchange.



The listed 3iQ CoinShares Bitcoin Feeder ETF (BT3Q) and the 3iQ CoinShares Ether Feeder ETF (ET3Q), both domiciled in Australia, provide investors with exposure to 3iQ&#8217;s underlying ETFs based out of Canada and listed on the Toronto Stock Exchange.



The underlying ETFs invest in long-term holdings of bitcoin and ether from exchanges and OTCs that are vetted by 3iQ, the manager said in a statement on Tuesday. The manager, which holds around $1.2 billion in crypto assets on behalf of clients, is not the first to the table with its offerings.



In May, Switzerland-based 21Shares and London-based ETF Securities became <a href="https://cms.blockworks.co/first-australian-spot-bitcoin-ether-etfs-to-go-live-next-week/" target="_blank" rel="noreferrer noopener">the first</a> in the country to debut their bitcoin and ether ETFs via a joint effort. Those listings were <a href="https://cms.blockworks.co/australian-bitcoin-and-ether-etfs-delayed-due-to-standard-checks/" target="_blank" rel="noreferrer noopener">initially delayed</a> in April before being given the green light two weeks later. Australia-based <a href="https://cms.blockworks.co/cboe-australia-lists-cosmos-physically-settled-ether-etf-amid-market-woes/" target="_blank" rel="noreferrer noopener">Cosmos Asset Manager</a> later joined the fray, adding its own physically-settled bitcoin and ether ETFs to the list toward the end of May. 



&#8220;We’re entering the Australian market with a significant point of difference, and that’s a proven track record of introducing and managing digital assets into regulated markets,&#8221; 3iQ told Blockworks when asked about competitors.



The variety for investors has come at a time when the Australian crypto market has been somewhat subdued, as evidenced in the debut <a href="https://cms.blockworks.co/first-spot-crypto-etfs-in-australia-underwhelm-traders-amid-market-downturn/" target="_blank" rel="noreferrer noopener">trading volumes</a> among 21Shares&#8217; ETFs.



Still, the move marks a turning point in Australia&#8217;s crypto landscape and may prove an essential tool among larger players looking to get their feet wet with the nascent asset class.



ETFs remove the need for institutional and retail investors to set up digital wallets while offering a more secure solution by way of a sanctioned custodian, 3iQ said. Though, they are not without their inherent pitfalls, as typical ETFs tend to track the underlying price of cryptos, such as bitcoin, and are vulnerable to extreme periods of market volatility.



&#8220;There are risks associated with investing in cryptocurrency-based products,&#8221; 3iQ CEO Fred Pye said in the statement. &#8220;These products are considered very high risk and investors should carefully assess their risk profile and seek their own financial advice before investing&#8221;



Both funds, which are available for investment either via Cboe, a stockbroker, or an online brokerage account, are expected to feature a low fee structure with a total management expense ratio of 1.20%, according to the statement.



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3iQ Latest Crypto ETF Fund Manager To Join Australian Market

Ben Strack

<div id="highlights-block_6259de8802a02" class="highlights">
 <ul>
 <li>3iQ launched Canada’s first bitcoin fund in April 2020 after challenging an initial decision by the Ontario Securities Commission</li>
 <li>President of 3iQ’s US business said the company could “throw [its] weight” behind a prospective US issuer’s existing filing</li>
 </ul>
 
</div>



Digital asset manager 3iQ is looking to bring its experience working with Canadian securities regulators to give hopeful US spot bitcoin ETF issuers a leg up.



Though the company isn’t planning to apply for its own ETF in the states, 3iQ is talking to US issuers about potentially “throwing [its] weight” behind their filing, Chris Matta, president of the firm’s US business, told Blockworks.&nbsp;



The SEC has repeatedly denied proposals from fund groups to launch a spot bitcoin product. Rather than adding yet another proposal to the mix, partnering with one or more firms could be a better path to help “move the needle” in the US, according to Matta.



3iQ launched Canada’s first bitcoin fund in April 2020, a closed-end investment vehicle for accredited investors priced in US dollars. It&#8217;s listed on the Toronto stock exchange. The firm has experience working with the Ontario Securities Commission (OSC).



“We battled the OSC, and we won using a data-driven approach, and then we’ve managed that product for two years flawlessly,” Matta said. “That’s something that can be really powerful to some of these issuers in the US that are looking to go toe-to-toe with the SEC.”



<div class="wp-block-image"><figure class="aligncenter size-medium"><img loading="lazy" decoding="async" width="267" height="300" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg" alt="3iQ" class="wp-image-20171" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=267 267w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=228 228w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=232 232w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=195 195w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=71 71w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=44 44w, https://blockworks-co.imgix.net/wp-content/uploads/2022/04/Chris-Matta-3iQ-002-267x300.jpg?w=344 344w" sizes="(max-width: 267px) 100vw, 267px" /><figcaption>3iQ&#8217;s Chris Matta</figcaption></figure></div>



3iQ had been working with the OSC’s Investment Funds and Structured Products (IFSP) branch for more than two years before the IFSP director concluded in February 2019 that bitcoin was an illiquid asset — essentially nixing the fund. The fund group sought a hearing and review of the director’s decision before a panel of the OSC, and the fund was subsequently approved.&nbsp;



The firm later launched its Ether Fund at the end of 2020. It then launched the 3iQ CoinShares ETF (BTCQ) about a month after Purpose Investments launched the first bitcoin ETF in Canada.



“We pushed the regulators in Canada,” Matta said. “It’s put pressure on the regulators in the US and now more of the asset managers in the US are really pushing the envelope.”



Grayscale Investments has specifically been aggressive in trying to convert its Bitcoin Trust (GBTC) to an ETF — a proposal the SEC is expected to rule on in July.&nbsp;&nbsp;



The world’s largest digital currency asset manager, Grayscale has urged investors to write to the agency supporting its proposal — a campaign that has led to a few thousand letters.



Grayscale CEO Michael Sonnenshein recently <a href="https://cms.blockworks.co/grayscale-ceo-spot-bitcoin-etf-approval-is-the-next-natural-step-for-sec/">doubled down</a> on comments that “all options would be on the table” if the SEC turned it down, including suing the agency.



Though US spot bitcoin ETFs would increase the competition for the Canadian ETFs already available from 3iQ and others, Matta said that it would be an “inflection point” in terms of increasing crypto adoption.&nbsp;



Matta said, however, that he doesn’t expect the SEC to approve a spot bitcoin ETF until the second half of 2023 or 2024. He cited <a href="https://cms.blockworks.co/as-crypto-regulatory-scrutiny-builds-gensler-urges-firms-to-register-with-sec/">recent comments made by Gary Gensler</a>, the agency’s chair, about ensuring crypto platforms register with the SEC.



“Until they have that oversight, I don’t think they’re necessarily going to be comfortable approving a bitcoin ETF,” Matta said. “The runway is still long.”



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



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