Canada’s Third-Largest Bank Invests Heavily in Bitcoin—Significant Stake in Leading BTC ETFs
Bank of Montreal Makes Significant Investment in Bitcoin ETFs
The Bank of Montreal has announced a substantial $150 million investment in spot Bitcoin ETFs, as revealed in a recent filing with the SEC.
Overview of BMO’s Investment
As Canada’s oldest financial institution, the Bank of Montreal (BMO) operates over 900 branches in Canada and more than 1,000 in the U.S. It is taking notable steps in the cryptocurrency sector. The recent approval of Bitcoin exchange-traded funds (ETFs) by the Securities Exchange Commission (SEC) in January 2024 has led to a rush among traditional financial institutions aiming to enhance their exposure to Bitcoin.
This surge in interest can be attributed to the fact that ETFs offer a more convenient and accessible means of investing in Bitcoin, the premier digital currency. By investing approximately $150 million in spot Bitcoin ETFs, BMO is making a significant entry into the crypto space, marking a pivotal moment for banks that are often cautious about digital assets.
Details of this investment were disclosed in BMO’s Form 13F-HR filing with the U.S. SEC, a report that institutional investment managers managing assets over $100 million are required to submit, providing insight into their investment portfolios. BMO’s actions showcase an increasing recognition of Bitcoin as a viable asset class by traditional financial entities.
Among BMO’s substantial investments, $139 million was allocated to BlackRock’s iShares Bitcoin ETF. The bank also diversified its holdings by investing in three additional Bitcoin ETFs: the Ark 21Shares Bitcoin ETF, the Fidelity Wise Origin Bitcoin Fund, and the Grayscale Bitcoin Trust. Additionally, BMO made a smaller investment of $17,000 in the ProShares Bitcoin ETF, which primarily engages in Bitcoin futures contracts rather than holding the cryptocurrency directly. In a related move, the National Bank of Canada recently initiated a $2 million investment in Bitcoin ETFs as well.
The Rise of Crypto Interest Among Financial Institutions
With leading financial firms warming up to Bitcoin, Wall Street banks are aggressively seeking opportunities within the expanding crypto market. Notable institutions like Morgan Stanley, Bank of America, and the Royal Bank of Canada are actively exploring crypto-related initial public offerings (IPOs), recognizing the lucrative potential of the sector.
A significant change in the regulatory landscape has emerged with the SEC’s withdrawal of the Staff Accounting Bulletin 121, which imposed stringent regulations on digital asset custody. Replacing it is Staff Accounting Bulletin 122, which permits companies to assess their crypto-related obligations utilizing broader accounting standards, including U.S. GAAP contingency rules and IFRS guidelines. This adjustment is expected to simplify the process for traditional banks to partner with cryptocurrency firms.
As a result of these evolving regulations, banks are keen to underwrite and guide crypto companies preparing for public listings, anticipating a wave of IPOs in the crypto space. This shift is further encouraged by signals of support for cryptocurrency-friendly policies from key political figures, which could ease regulatory constraints and promote the U.S. as a pivotal hub for digital currency businesses.
As of now, Bitcoin is trading at approximately $97,396, reflecting a slight increase of 0.69% over the past day, despite a 38% drop in trading volume. This price trend highlights the complexities and volatility inherent in the cryptocurrency market, presenting both opportunities and challenges for investors.
