report the assets of crypto ETFs in Canada

Balance, the Canadian cryptocurrency custodian, has obtained the status of a qualified custodian, initiating a strategy to relocate the crypto assets of Canadian ETFs, currently held in sub-custody in the United States.

Let’s see all the details. 

Canada: Balance obtains qualified custodian status and aims to relocate the ETFs 

Canada has taken a significant step in strengthening its infrastructure in the cryptocurrency sector.

This week, Balance, one of the longest-standing cryptocurrency custodians in the country, has achieved the status of a qualified custodian, a milestone that represents a turning point for the Canadian crypto market.

This recognition allows Balance to directly hold the digital assets of Canada’s ETFs without having to rely on foreign sub-custody partners. 

The CEO of the company, George Bordianu, welcomed the news with enthusiasm, stating that it is time to “bring home” the digital assets of the country’s crypto investment funds.

Currently, a significant portion of the digital assets of Canadian ETFs is entrusted to custody service providers in the United States. 

Among the major beneficiaries are U.S. exchanges like Coinbase and Gemini, which collaborate with Canadian ETF providers such as 3iQ, Purpose Investments, and Evolve. 

Bordianu explained that this dependence on foreign custody could have negative long-term consequences for Canada, limiting the sovereignty and autonomy of the local financial sector. 

“We have billions of retail assets in Canadian crypto ETFs that are located in the United States. We would like to bring these assets home.”

The construction of a fully integrated crypto system

Balance has achieved the status of a qualified custodian thanks to an internal technological approach. 

Unlike other companies, Balance does not use sub-custody partnerships or third-party technologies, such as Fireblocks or Digital Vault, preferring to focus on a technology solution developed independently. 

This distinctive element has allowed Balance to gain recognition as a qualified custodian, increasing confidence in its ability to manage digital assets directly on Canadian soil.

The decision to build an autonomous technological infrastructure reflects Bordianu’s vision, which aims to simplify the process for Canadian asset managers, allowing them to create new ETF and mutual investment funds in Canada.

The issue of foreign custody is of particular relevance in a context where the demand for digital assets and crypto investment solutions is in constant growth. 

“If we look at the future of digital assets, including tokenized real-world assets and stablecoins, Canada must develop its own custody infrastructure to maintain its competitiveness and independence in the global market.”

The vision of Balance is therefore oriented towards the construction of a fully integrated crypto ecosystem, capable of meeting the needs of a rapidly evolving market.

One of the main challenges in bringing back the crypto assets of Canadian ETFs to the country concerns the consolidation of local infrastructures. 

Bordianu illustrated this issue with a comparison: 

“It’s like saying that the Toronto Stock Exchange should connect to the Depository Trust & Clearing Corporation in the United States to clear and settle all their transactions through that foreign infrastructure. If you put it in those terms, it sounds absolutely crazy.”

The statement highlights the importance of developing an independent system for managing Canadian digital assets, avoiding reliance on foreign structures.

Simplification of processes and accessibility

Another crucial aspect of Balance’s vision concerns the simplification of the process for new asset managers interested in entering the Canadian crypto market.

The complexity of regulations and the difficulties related to the custody of assets in partnership with foreign sub-custodians have so far represented an obstacle for many operators. 

With the possibility of directly managing assets in Canada, Balance aims to create a more accessible and favorable environment for the development of new investment products, such as crypto ETFs and mutual funds, thus contributing to the growth of the Canadian financial sector.

The importance of a Canadian crypto infrastructure is also reflected in the need to adapt to a future in which digital assets could become a fundamental component of the global economy.

The proliferation of stablecoin and tokenized assets, for example, requires solid and reliable custody structures that ensure the security and liquidity of investments.

Canada, according to Bordianu, cannot fall behind in this field. The goal of Balance is therefore to position the country as a leader in the management of digital assets, preparing it to compete on a global scale.