Crypto ETFs and Their Impact on the Canadian Stock Market
Back in 2021, when Canada launched the world’s first crypto ETFs, many were skeptical about their success. However, it turned out that their impact was incredibly positive for many Canadians, who could now get exposure to a relatively complex asset in the click of a button.
The Purpose Bitcoin ETF (BTCC), which debuted on the Toronto Stock Exchange (TSX), marked a significant moment for the entire Canadian financial system. Other blockchain ETFs soon followed, and the assets flowed into these funds at a record pace.
The ETFs Mainstreamed Cryptocurrency Investing
Before the appearance of Bitcoin ETFs, cryptocurrencies were a rather fringe occurrence for Canadian investors. Being involved in the space, I rarely heard about those who held cryptocurrency. Now? More than half of the investors I interact with own a piece.
Prior, exposure was limited to digital wallets and crypto exchanges, restricting traditional investors and institutional players. Crypto ETFs changed that, allowing far deeper integration and offering direct access to all interested parties. ETFs came from major fund managers as well, boosting trust, and their involvement with crypto signaled its legitimacy.
ETFs also allowed easy investing, making it possible even for casual investors to jump in. No more complex wallets or the worry of falling victim to a scam. This normalized cryptos like Bitcoin and Ethereum as an asset class that exists on par with stocks, bonds, etc.
Boosting the Development of Crypto Industries in Canada
The introduction of Bitcoin ETFs has had a massive impact on the crypto industry in Canada, including crypto startups, blockchain research, and fintech infrastructure.
ETFs have provided backing for venture capital funds, which now provide huge investment funds for Canadian companies building wallets, custodial services, DeFi protocols, and even Bitcoin poker sites, confident that a regulated market environment supports their investments.
The more interesting thing on this front as well is people trust those platforms enough to deposit crypto, meaning consumers are becoming more familiar with the asset.
Increasing Market Liquidity and Trading Volume
The Toronto Stock Exchange (TSX) and other Canadian markets have benefited greatly from the increased trading activity brought on by crypto ETFs. Media attention and speculative appeal result in high trading volume for all crypto products, including ETFs. Ultimately, this brings in more money for the brokerages and indexes.
Purpose Bitcoin ETF saw more than $165 million in trading volume on its first day, a figure far surpassing many older and better-established traditional ETFs on the market. Since then, the demand only grew, making crypto ETFs one of the most sought-after funds on the Toronto Stock Exchange.
The increase in surge activity means that market liquidity is on the rise as well, a welcome fact in these trying times.
And finally, the inflows have caused increased competition in Canada, ultimately resulting in more funds being brought to market at lower fees. A prime example of this would be the iShares Bitcoin ETF (IBIT). A Canadian variant was launched in early 2025, and it had the lowest fees of any Canadian crypto ETF. This competition can only benefit individual investors.
Fueling Growth in Assets Under Management (AUM)
Canadian crypto ETFs have accumulated billions of dollars in assets under management, a clear indicator of their appeal and popularity with investors.
The Purpose Bitcoin ETF alone holds over 25,000 BTC, while CI Galaxy Bitcoin ETF (BTCX) and 3iQ CoinShares ETF also hold significant amounts. Massive AUM held by these relatively new players on the market indicates a high level of trust among the investors and bodes well for the future.
ETFs serve as a bridge between traditional finance and digital assets, enabling pensions, endowments, and portfolio managers to hold cryptocurrency. Prior to this, the thought of these managers opening up a cryptocurrency wallet and holding Bitcoin would have been a regulatory and security nightmare.
Risks and Market Volatility
Even though there are numerous benefits from crypto ETFs, they have introduced significant new risks to the Canadian market. Chief among these is Bitcoin’s notorious price volatility. Market swings remain a concern among investors, and crypto ETFs can do little to protect them from them.
Yes, they hold the assets securely. But they do not protect you from a fall in price.
Large AUMs in Bitcoin can become a source of problems if some ETFs panic and suddenly decide to dump them on an unsuspecting market. Such an event could easily crash not only the crypto market, but severely cripple the entire financial sector. Then again, that is the risk even with traditional assets like oil and gold.
Wrapping it up
The introduction of crypto ETFs on the Canadian market has had a huge impact on the country’s financial sector. Canada was first to market in regards to crypto ETFs in North America, and now that they have launched in the United States, we are seeing more fund managers enter Canada, offering lower fees. This will benefit you as an individual investor.
The overall impression is that the benefits far outweigh any risk associated with crypto’s volatility, and even those can be reduced if properly managed. But even though only four years have passed since the first crypto ETFs appeared in Canada, we can say with utmost certainty: they are here to stay.