3IQ's Bitcoin Fund lists on Nasdaq Dubai

Bookbuilding process for fund's regional offer awaits approval from the Dubai Financial Services Authority

3iQ chairman Frederick Pye rings the opening bell at Nasdaq Dubai's headquarters to mark the dual listing of the Canadian digital asset manager's Bitcoin Fund on the exchange. Courtesy: Nasdaq Dubai

3iQ, the company behind The Bitcoin Fund listed on the Toronto Stock Exchange, completed its dual listing on Nasdaq Dubai on Wednesday.

Through the listing, it becomes the first exchange-traded fund offering an investment in Bitcoin in the Middle East and North Africa region.

The Nasdaq Dubai listing "gives average investors right up to institutions access to Bitcoin in a safe, secure way", 3iQ chairman and chief executive Frederick Pye told The National.

The dual listing also gives people in the Mena region access to the fund outside of North American trading hours and extends the trading periods available to North American investors to six days a week "and almost 24 hours a day", he added.

Cryptocurrencies are not licensed by the Central Bank of the UAE, although a number of cryptocurrency exchanges are approved to operate within Abu Dhabi Global Market, the emirate's financial free zone. The UAE dirham is the only legal tender in the country that is recognised by the central bank.

The Bitcoin Fund allows people to buy units in a fund based on the world's biggest cryptocurrency that has endured dramatic recent price swings.

When plans for its Nasdaq Dubai listing were first announced in mid-April, Bitcoin was worth $54,806 and the Bitcoin Fund had a value of $1.45 billion. The cryptocurrency plunged below $30,000 on Tuesday for the first time since January this year, on investor concerns about a regulatory clampdown in China, which has moved to ban energy-intensive Bitcoin mining, due to environmental concerns. Authorities in Iran also seized equipment from about 7,000 cryptocurrency miners on Tuesday.

The fund's value had fallen to $420.35m at close in Toronto on Tuesday, but Bitcoin rallied by about 7.4 per cent on Wednesday and was trading at $34,111 at 2.37pm in Dubai.

Such swings are "perfectly normal", Mr Pye said.

"Anything that comes from $10,000 to $60,000 is going to come back to $20,000 or $30,000," he said.

"There's going to be volatility but in its lifetime its upside volatility has managed to produce extraordinary returns. It will continue to be volatile, but Bitcoin is here to stay."

3iQ had also been planning a book-building process within local markets for a regional offer for the fund, through which it is targeting more than $200m of subscriptions. Dubai-based Dalma Capital and Vancouver's Canaccord Genuity have been appointed as lead arrangers. However, this has yet to take place as regulatory approval from the Dubai Financial Services Authority has not yet been secured.

"There are some technical issues we have to work through around transferring stock from Canada to Dubai, but when we've got all of that figured out Dalma and Canaccord will build the book. We think we've got support from all levels of government. We certainly have support from some of the sovereign wealth funds and well-known family offices in the region. So we expect it to be a very successful offer," Mr Pye added.

Interest in the fund is coming from investors across the Mena and South Asia region through banks in the DIFC, Dalma Capital's chief executive Zachary Cefaratti said.

The fund will serve "as a broader alternative investment vehicle that will offer a more efficient and regulated option for regional investors to access the asset class”, he said.