Best Crypto ETFs in Canada: A Guide for Investors in 2024

The world of cryptocurrency is constantly evolving, and for Canadian investors, finding the right investment vehicle is crucial. If you’re interested in crypto but don’t want to deal with the complexities of directly buying and managing digital currencies, investing in a cryptocurrency exchange-traded fund (ETF) might be the ideal solution. In this guide, we'll dive into the best crypto ETFs available in Canada, discussing their benefits, risks, and how they compare on key metrics.

1. What Are Crypto ETFs and Why Should You Invest?

Crypto ETFs allow investors to gain exposure to digital currencies like Bitcoin and Ethereum without needing to purchase them directly. These funds pool money from various investors and then use it to buy a basket of crypto assets. They’re traded on traditional stock exchanges like the Toronto Stock Exchange (TSX), making them accessible and easy to manage.

For Canadian investors, the appeal lies in security, diversification, and regulation. Unlike direct investments in cryptocurrency, which require handling digital wallets and private keys, ETFs offer a regulated environment, reducing risks associated with hacking or mismanagement of funds.

2. Top Crypto ETFs in Canada for 2024

Here are some of the most popular and best-performing crypto ETFs available to Canadian investors:

a. Purpose Bitcoin ETF (BTCC)
The Purpose Bitcoin ETF is Canada’s first Bitcoin ETF, launched in 2021. It allows investors to gain exposure to Bitcoin without directly owning the asset. As of 2024, it remains one of the most popular choices for crypto exposure. Its key features include:

• Low management fees: Around 1%
• Daily Bitcoin tracking: The ETF closely tracks the price of Bitcoin.
• Availability in both CAD and USD: Investors can buy shares in Canadian dollars or US dollars, offering flexibility.

b. CI Galaxy Ethereum ETF (ETHX)
For those looking to gain exposure to Ethereum, the CI Galaxy Ethereum ETF is a strong contender. It tracks the performance of Ether (ETH) and is one of the few Canadian ETFs solely focused on this cryptocurrency. Key points include:

• Focus on Ethereum: Ideal for investors bullish on Ethereum’s growth.
• Management fees: Approximately 1%.
• Liquidity: As one of the most traded Ethereum ETFs in Canada, it offers decent liquidity.

c. Evolve Cryptocurrencies ETF (ETC)
The Evolve Cryptocurrencies ETF offers a diversified approach, investing in both Bitcoin and Ethereum. This makes it a great option for investors who want exposure to more than one cryptocurrency. Key highlights include:

• Diversification: Combines Bitcoin and Ethereum in one ETF.
• Lower fees: Compared to holding separate ETFs for both assets.
• High trading volume: Ensures good liquidity and tight spreads.

3. Performance Comparison

To give investors a better understanding of these ETFs, here’s a comparison of their performance over the past year:

ETF	1-Year Return (%)	Management Fees (%)	Assets Under Management (AUM, $M)
Purpose Bitcoin ETF (BTCC)	15.3%	1.0%	1,700
CI Galaxy Ethereum ETF (ETHX)	23.7%	1.0%	600
Evolve Cryptocurrencies ETF (ETC)	18.1%	0.75%	800

As shown above, the CI Galaxy Ethereum ETF has been the best performer over the past year, thanks to Ethereum’s growth in decentralized finance (DeFi) and non-fungible tokens (NFTs). However, the Purpose Bitcoin ETF remains the largest by assets under management.

4. The Regulatory Landscape in Canada

Canada has been a leader in crypto ETF adoption, with several regulatory approvals allowing these funds to be available to retail investors. The Canadian Securities Administrators (CSA) and the Ontario Securities Commission (OSC) play critical roles in overseeing these ETFs, ensuring that they follow strict guidelines to protect investors.

In contrast, the U.S. still lags in crypto ETF approvals, making Canada a more attractive market for North American investors looking to gain exposure to cryptocurrencies through ETFs.

5. Risks and Considerations

While crypto ETFs offer a safer alternative to direct crypto investing, they still come with risks:

• Volatility: Cryptocurrencies are known for their price swings, and ETFs tracking these assets are no different.
• Management Fees: Although lower than mutual funds, ETF fees can eat into profits, especially during downturns.
• Tax Implications: Investors need to be aware of how crypto ETF gains are taxed in Canada.

6. How to Invest in Crypto ETFs in Canada

If you’re ready to invest in a crypto ETF, here’s a step-by-step guide:

a. Choose a Brokerage
You'll need to have an account with a brokerage that offers access to the TSX or NEO exchanges, where most Canadian crypto ETFs are listed. Popular options include Wealthsimple, Questrade, and Interactive Brokers.

b. Do Your Research
Before buying, make sure you’ve researched the specific ETF, including its management fees, the underlying assets, and the fund’s performance history.

c. Place Your Order
Once you’ve selected the ETF, simply place an order through your brokerage platform. Most platforms offer both market and limit orders for these funds.

7. Future of Crypto ETFs in Canada

With increasing regulatory clarity and growing investor demand, the future of crypto ETFs in Canada looks bright. In 2024, we can expect more diverse offerings, possibly including funds that track other digital assets like Solana (SOL) or Cardano (ADA). There may also be new ETF products focused on crypto mining stocks or blockchain technology.

Investors should keep an eye on regulatory developments and market trends to make informed decisions.

Conclusion

For Canadian investors looking to gain exposure to cryptocurrencies without the hassle of managing digital wallets and private keys, crypto ETFs offer an excellent solution. Whether you’re interested in Bitcoin, Ethereum, or a combination of both, there are several ETF options available that provide a secure and regulated way to invest in this exciting asset class.