Stock Bitcoin
Bitcoin's come down from $60,000 levels, but there's this sentiment that institutional buying could pick up the slack. Image Credit: Reuters

Dubai: A Bitcoin-focussed fund will list on Nasdaq Dubai, making it the first digital asset fund to do so in the Middle East. The listing comes as Bitcoin recently pushed past its highest point ever – crossing $60,000 – before slipping to $54,500 levels over the last few days.

The listing should take place this quarter itself, according to the promoter. The ‘Bitcoin Fund’ comes from 3iQ Digital Asset Management, which received the final clearances from DFSA (Dubai Financial Services Authority) and regulator of Nasdaq Dubai. The Fund is an extension of the listing done in April last year on the Toronto Stock Exchange – at the time it claimed the title of being the ‘world’s first regulated, major exchange listed Bitcoin fund’.

Dubai’s Dalma Capital is the syndicate manager for the closed-ended Fund and lead its profile and exposure among Middle East based investors.

It’s institutional, not individual

Despite the price slip ups of recent days, a top official at Dalma reckons the Bitcoin as an asset narrative is not one to go away. “The recent price run-up is less defined by retail purchasing and more to do with an incrementally increasing institutional allocation to Bitcoin as a store of value,” said Zachary Cefaratti, CEO of Dalma Capital. “This trend is likely to continue in this region as well.

Zachary Cefaratti, CEO, Dalma Capital Management
“While it is true that days of extreme volatility are accompanied by above-average volume, Bitcoin and its exchange traded counterparts attract high volume on a daily basis…” - Zachary Cefaratti, CEO Dalma Capital Image Credit: Supplied

“We have seen growing appetite from increasingly sophisticated institutional investors - and family offices - for safe and efficient exposure to Bitcoin. Bitcoin has, from the beginning, been a grassroots movement and has been sold and promoted from peer-to-peer. There is no need to hard-sell Bitcoin - that has already been done by visionaries like Elon Musk and by grassroots investors.”

He’s got that right – Musk and Tesla are playing their part in riding this Bitcoin wave, and more blue-chip US entities are either talking about buying up these coins or have already done so. (The recent price stumble had to do with Turkey banning all cryptocurrency-based transactions and concerns that other major economies, reportedly India, as following this path.)

But Cefaratti is keeping his eyes in the here and now. “This fund provides investors with robust access product so that they can gain exposure to Bitcoin through their trusted and regulated banking, brokerage and exchange channels here in the region,” he said.

What’s 31Q?

Since its April listing in Toronto, the Bitcoin Fund has built up a size of $1.37 billion. The Toronto Stock Exchange has been the go to place for Bitcoin and other crypto assets; the exchange has the regulatory framework as well as a conducive environment for these new-fangled investments.

According to 3iQ, the listing in Dubai allows new investors an exposure to an “asset class that has experienced exceptional appreciation over the preceding decade”.

“The goal of our Fund is to give the purest exposure to the underlying digital asset,” said Frederick Pye, Chairman and CEO, 3iQ Corp. “If more corporate giants continue to buy the assets, the effect will be a price increase caused by combination of greater demand with the scarcity of the asset.”

Frederick Pye - Chairman and CEO, iQ Corp
“3iQ has created different Funds for other cryptos by starting with the leading cryptos Bitcoin and Ether. Because of that, 3iQ is one of the largest Bitcoin and Ether holder in the world and 3iQ will continue to bring innovative crypto funds to market…” - Frederick Pye, Chairman and CEO, 3iQ Corp Image Credit: Supplied

Until now, the Bitcoin movement in the UAE and elsewhere in the Gulf has been led by individual investors. But some family offices – essentially financial vehicles taking care of the wealth of super-rich families – have taken positions in this asset and should be adding more.

“There is a limited supply of 21 million Bitcoins,” said Pye. “It does not limit our Fund or investors’ options - it is expected that the price per Bitcoin will continue to rise if adoption of this asset class continues. 3iQ has been trading and managing bitcoin for years and we have built an efficient structure to support the growth of the market.”

The Fund will buy - and hold – Bitcoin and will not deploy in other crypto asset classes. “The objective is to provide pure Bitcoin exposure,” Pye added.

Choice of Nasdaq Dubai

“It was important for 3iQ, Nasdaq Dubai and Dalma Capital to make sure that we got everything right with this listing, both from a regulatory and investor standpoint,” said Cefaratti. “The process for obtaining regulatory approval in Canada and at DIFC did indeed take more time given the importance that all stakeholders placed on ensuring that the offering was sound and robust.

“In terms of limits, there is no minimum or maximum restriction on the amount one can invest in the fund once shares are trading on the exchange."