According to local reports, Canada’s crypto ETF market, which has been steadily losing ground to its U.S. counterpart, may soon get a shake-up as Toronto-based Evolve Funds prepares to launch the country’s first leveraged Bitcoin and Ethereum ETFs.
Evolve has filed a preliminary prospectus for the Evolve Levered Bitcoin ETF and Evolve Ether ETF, offering 1.25x leveraged exposure to Bitcoin and Ethereum. Unlike U.S. funds that use derivatives and provide up to 2x leverage, They plan to rely on cash borrowing, with monthly rebalancing instead of the daily adjustments typically seen in leveraged ETFs.
The move comes as Canada’s crypto exchange-traded funds (ETFs) face challenges retaining investors. According to National Bank Financial, over the past five months, more than C$1.1 billion has exited Canadian crypto funds, with many investors shifting their focus to U.S. spot Bitcoin ETFs launched earlier this year. U.S. funds have attracted attention due to their lower fees, higher trading volumes, and more appealing offerings.
The Canadian crypto ETF market has also faced regulatory challenges in 2024. Authorities raised concerns about the use of digital assets, including stablecoins, in the trafficking and production of synthetic drugs like fentanyl. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) highlighted the role of cryptocurrencies in bypassing traditional financial systems to facilitate the global drug trade.
This announcement comes after CoinShares reported that crypto investment products experienced nearly $2 billion in inflows last week, bringing the year-to-date total to $4.8 billion. Bitcoin was the primary contributor, attracting $1.6 billion, which comprised 92% of the inflows. Since January, Bitcoin has received $4.4 billion in investments. Additionally, Short-Bitcoin ETFs saw $5.1 million in inflows as traders hedged against market corrections. The U.S. led in inflows with $1.7 billion, followed by Canada ($31 million), Switzerland ($35 million), and Germany ($23 million).
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