bitcoin is in proportion to its usefulness,
scarcity and demand.
Bitcoin is useful in uncensorable value
transfers. Money can be sent peer-to-peer
without the need for the banking system to
facilitate the transfer. Small payments can be
made in short periods of time and require
only the Internet and a smart phone. This is
potentially useful to billions of people globally.
As a store of value, bitcoin has been highly
volatile but has managed to grow from being
worth pennies to thousands of dollars. The
value is reinforced by its computationally
codified scarcity and transparency. As the
number of users of the bitcoin network grows,
so too will its usefulness. By Metcalfe’s Law,
the value of the network will grow making
each coin more valuable due to its scarcity.
As an early stage technology bitcoin is not yet
simple nor consumer-friendly, but acceptance
will improve with applications integrating
digital currency payments.
Canadians are investing in bitcoin today
without the benefit of securities law protections.
Investor protection is paramount to the mandate
of securities regulators, but there is none today
for investors in bitcoin simply because bitcoin
itself has not been designated a security even if it
is being treated as such by the public. Today
Canadians are left with accessing bitcoin in a
suboptimal fashion, incurring unnecessary high
costs, potentially unsecured custody and poor
We believe the time is right for a regulated, listed
bitcoin investment fund available to Canadian
retail investors for the following reasons:
• Over the past 9 years bitcoin has become an
investable, liquid asset.
• The IIROC-member channel can be a basis
for more informed discussions with retail
investors on risk and suitability and a fund
minimizes exposure to fraud.
• While bitcoin has been volatile in price, risk
disclosures in a prospectus are thorough and the
return-to-risk is compelling.
• A closed-end fund structure should be used
as it is superior to an ETF structure because
the fund manager can control the size of the
fund relative to bitcoin’s liquidity.
• Trading counter parties with a closed-end
fund would be the most regulated and
KYC/AML/CTF compliant available and utilize
cryptoasset best practices.
• A fund would not deal with unregulated
exchanges nor unknown participants, and nor
should retail investors.
• A professionally managed, regulated bitcoin
fund would employ a Canadian trust
company and a globally recognized bitcoin
custodian to provide safekeeping of the
bitcoin in offline vaults.
Bitcoin as an Investment
Bitcoin can represent a form of payment (i.e.
value transfer), a store of value or a digital
commodity. As any of those designations or a
hybrid of the definitions, bitcoin may be
considered an investment. The value of
This is a shortened version of the whitepaper. To view our full White Paper,
please visit: https://3iq.ca/wp-content/uploads/2018/09/3iQ-Whitepaper.pdf
BITCOIN FUND Fred Pye, President & CEO of 3iQ Corp. and Howard Atkinson, CFA, CIMA, ICD.D, Chair of 3iQ