Canada’s ETF market may soon feature leveraged crypto funds as Evolve Funds moves to launch new Bitcoin and Ethereum products.
For quite some time, Canada‘s crypto exchange-traded fund scene has been losing investors to the U.S. as lower fees, higher trading volumes, and the launch of spot Bitcoin ETFs in the U.S. have drawn capital away from Canadian funds.
Now, Evolve Funds is making a play to bring them back — with leverage.
The Toronto-based firm has filed a preliminary prospectus to launch Canada’s first leveraged crypto ETFs, The Globe and Mail has learned. If approved, the Evolve Levered Bitcoin ETF and Evolve Levered Ether ETF will offer 1.25x exposure to Bitcoin (BTC) and Ethereum (ETH).
The Canadian newspaper notes that this figure is lower than the 2x leverage some U.S. funds offer. But unlike them, Evolve plans to use cash borrowing instead of derivatives. The funds will also rebalance monthly, not daily.
Crypto ETFs have had a rough 2024 in Canada. Outflows lasted five months straight. Investors reportedly pulled over C$1.1 billion from these funds, according to National Bank Financial. Much of that money moved south, where U.S. spot Bitcoin ETFs launched in January 2024.
Earlier this year, the Canadian government raised concerns about the growing use of cryptocurrencies in the illicit opioid trade, particularly in the trafficking and production of fentanyl and other synthetic drugs. According to the Financial Transactions and Reports Analysis Centre of Canada, digital assets, including stablecoins, are being used to facilitate international drug trade while bypassing traditional financial systems.
