The Securities Commission granted exemptive relief to an exchange-traded fund (ETF) from certain provisions of National Instrument 81-102 Investment Funds (NI 81-102) and related securities legislation. This decision allows the ETF to accept digital assets, specifically bitcoin and ether, as subscription proceeds for units of the fund, which are not typically considered cash or securities. Additionally, the ETF is permitted to purchase and sell crypto contracts from and to Fidelity Clearing Canada ULC (FCC), an entity affiliated with the fund’s manager.
The relief is subject to conditions that ensure compliance with regulations aimed at preventing money laundering and terrorist financing, as well as oversight by an independent review committee (IRC). The ETF must also maintain written records of crypto contract transactions for five years.
The decision is based on the reasoning that allowing digital assets as subscription proceeds and permitting transactions with FCC aligns with the ETF’s investment objectives and is not prejudicial to the public interest or investor protection. The relief is contingent on the ETF’s adherence to specific conditions, including the acquisition of digital assets through regulated platforms and direct delivery to the ETF’s digital wallet.
The relevant legislative provisions underpinning the outcome include subsections 9.4(2) and 4.2(1) of NI 81-102, subsection 13.5(2)(a) of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103), and subsections 111(2)(c)(ii) and 111(4) of the Securities Act (Ontario). The decision was made under the Process for Exemptive Relief Applications in Multiple Jurisdictions, with the Ontario Securities Commission acting as the principal regulator.