BMO Cryptocurrency ETF: 3 Alternatives & Future Outlook for Canadian Investors (2023)

Understanding the BMO Cryptocurrency ETF Landscape

As cryptocurrency adoption accelerates, Canadian investors increasingly seek regulated exposure through exchange-traded funds (ETFs). While BMO (Bank of Montreal) doesn’t currently offer a dedicated cryptocurrency ETF, its robust ETF ecosystem provides strategic alternatives for crypto-adjacent investments. This guide explores BMO’s position in the crypto ETF market, analyzes three practical alternatives, and examines future possibilities for direct crypto exposure through Canada’s second-largest bank.

Why BMO Hasn’t Launched a Cryptocurrency ETF (Yet)

Despite growing demand, BMO Global Asset Management hasn’t introduced a pure-play cryptocurrency ETF due to:

• Regulatory caution: Awaiting clearer frameworks from OSC and IIROC
• Volatility concerns: Prioritizing capital preservation in core offerings
• Strategic focus: Emphasis on blockchain infrastructure vs. direct crypto assets
• Custodial challenges: Security complexities of digital asset storage

BMO’s approach mirrors many traditional institutions cautiously navigating crypto’s regulatory gray areas while developing blockchain expertise.

3 BMO ETF Alternatives for Crypto Exposure

While awaiting a potential BMO cryptocurrency ETF, investors can consider these three BMO ETFs with crypto/blockchain ties:

1. BMO Equal Weight Global Gold Index ETF (ZGD)

• Holds gold mining companies increasingly involved in Bitcoin mining
• Provides inflation hedge similar to Bitcoin’s “digital gold” narrative
• 5-year annualized return: 8.2% (as of Q2 2023)

2. BMO Nasdaq 100 Equity Index ETF (ZNQ)

• Includes crypto-adjacent tech giants like Coinbase, MicroStrategy, and Nvidia
• Offers exposure to blockchain infrastructure developers
• 0.39% MER with CAD-hedged options

3. BMO Mid-Term US IG Corporate Bond ETF (ZIC)

• Conservative hedge against crypto volatility
• Includes corporate bonds from financial institutions expanding into crypto services
• Distributes monthly income with 4.1% yield

How to Access Pure Crypto ETFs Through BMO Platforms

BMO InvestorLine clients can purchase third-party cryptocurrency ETFs including:

• Purpose Bitcoin ETF (BTCC): First North American spot Bitcoin ETF
• CI Galaxy Ethereum ETF (ETHX): Direct ETH exposure
• Evolve Cryptocurrencies ETF (ETC): Multi-coin portfolio

Transaction fees apply, but BMO’s platform provides secure access with familiar trading interfaces.

Future Outlook: Will BMO Launch a Cryptocurrency ETF?

Industry analysts predict possible BMO cryptocurrency ETF developments by 2024-2025, driven by:

• Maturing Canadian crypto regulations (CSA guidelines)
• Competitive pressure from Purpose and CI Global ETFs
• Growing institutional adoption (BlackRock’s recent Bitcoin ETF filing)
• BMO’s expanding digital assets division

Potential structures could include a Bitcoin spot ETF, blockchain technology ETF, or crypto miner basket.

Cryptocurrency ETF Investment Considerations

Before investing, evaluate:

• Fees: MERs range 0.40-1.00% for crypto ETFs
• Taxation: Treated as capital assets in non-registered accounts
• Volatility: 30-day volatility often exceeds 60%
• Custody: Verify insurance coverage for digital assets

Consult a BMO financial advisor to align investments with risk tolerance.

FAQ: BMO Cryptocurrency ETFs

Does BMO offer a cryptocurrency ETF?

Not currently. BMO focuses on crypto-adjacent ETFs like technology and commodity funds while monitoring regulatory developments.

Can I buy Bitcoin ETFs through BMO?

Yes. BMO InvestorLine allows trading of Canadian-listed Bitcoin ETFs including BTCC, EBIT, and BTCX with standard equity commissions.

What’s the closest BMO ETF to cryptocurrency?

BMO Nasdaq 100 ETF (ZNQ) provides the most direct exposure through holdings like Coinbase (COIN) and blockchain technology companies.

Are cryptocurrency ETFs safer than direct crypto?

Generally yes. ETFs offer regulatory oversight, institutional custody, and eliminate wallet security risks while providing tax documentation.

Will BMO create a crypto ETF soon?

Industry observers anticipate movement within 24 months as regulations solidify, but BMO hasn’t announced concrete plans.

Strategic Positioning for Crypto-Curious Investors

While the BMO cryptocurrency ETF remains unrealized, prudent investors can:

1. Utilize existing BMO tech/gold ETFs for indirect exposure
2. Access third-party crypto ETFs through BMO InvestorLine
3. Monitor BMO’s digital asset announcements for future products
4. Allocate only risk-capital portions to crypto assets

As regulatory clarity emerges, BMO’s entrance could significantly impact Canada’s crypto investment landscape, potentially offering the institutional trust many cautious investors await.