Canada’s first exchange-traded fund (ETF) backed by physically settled bitcoin was launched just over a year ago and the total digital assets under management across all Canadian ETF providers now exceeds $4 billion.
The demand for custody services in Canada has been growing at an impressive rate as institutional clients further invest in and transact with digital assets.
However the Canadian market for custody has historically been limited to U.S. providers and unregulated custodians.
Canadians who invest in cryptocurrencies on a domestic platform, like Wealthsimple Crypto, may be surprised to learn that their digital assets are stored through a U.S. company such as Gemini or BitGo.
The strategic alliance will see Tetra offer institutional clients custody services using Knox’s proprietary, insurable custody system, maintained by a qualified Canadian custodian, Tetra.
With billions of dollars worth of Canadian-owed crypto sitting with American custodians, today’s announcement is one to celebrate for Canada. Canadian investors now have a strong regulated domestic option to store their digital assets and those assets are protected under Canadian law.
“Tetra is excited to partner with Knox as they have been a Canadian pioneer in Bitcoin custody. The institutional market for a trusted, secure custody provider for cryptocurrency continues to grow and Tetra is uniquely positioned as the first and only trust company licensed to custody digital assets to serve this growing market,” said Eric Richmond, CEO of Tetra Trust.
Founded in 2019, Tetra Trust is Canada’s First Qualified Custodian for cryptocurrency assets. Tetra received its Certificate of Registration from the Government of Alberta on July 5, 2021 and meets the definition of a qualified custodian under National Instrument 31-103 Registration Requirements, Exemptions, and Ongoing Registrant Obligations.
Tetra Trust is backed by Coinbase Ventures, an investment arm of Coinbase (NASDAQ:COIN) which is the largest publicly traded cryptocurrency exchange in the world; Coinsquare, Canada’s premier cryptocurrency exchange digital asset trading platform; the Canadian Securities Exchange; Mogo Financial (TSX:MOGO); and Urbana Corporation.
As part of the alliance, Tetra will also acquire certain assets, facilities and insurance policies currently used by Knox and provide custody services for Knox’s existing Canadian customers.
“Canada has been a leader in Bitcoin’s institutional adoption, but has lagged with respect to qualified custodial services. Partnering with Tetra Trust is an important strategic move for Knox as it will bring our best-in-class insured custody infrastructure to new audiences. This is a big step forward in advancing the adoption of Bitcoin in Canada, and we look forward to serving institutional clients seeking the safest compliant option in the Canadian market,” said Alex Daskalov, CEO of Knox.
Canada’s institutional market and regulatory bodies have been highlighting the need for enhanced custody services in the crypto space and for Canadian-based options to be made available.
“While Canada has led the way in physically settled crypto products, it has lagged in terms of the availability of domestic Qualified Custody options,” said Elliot Johnson, Chief Investment Officer and Chief Operating Officer at Evolve ETFs. “The emergence of new players in this space is a welcome sign of a maturing ecosystem.”
Alex Tapscott, a long-time commentator and investor in digital assets and Managing Director at Ninepoint Partners LP, added, “A qualified custodian with adequate levels of insurance protection is essential to enable institutions to participate in the crypto market. A domestic solution has the potential to unlock new levels of participation in this fast-growing asset class.”