It’s been a landmark week for ETFs, with three prominent issuers launching the first-ever crypto exchange-traded funds in Australia. Canada’s 3iQ Digital Asset Management is right in the mix, offering unique, battle-tested experience. To learn more, Stockhead last week spoke to its chairman and CEO, Fred Pye. 

Who is 3iQ?

3iQ Digital Asset Management is an eye-catching addition to the crypto ETF race Down Under, which includes 21Shares and Cosmos Asset Management.

“We’ve actually been in the hunt on this for quite a while,” mentions Pye. “Kind of traveling under the radar, working closely with regulators. People realise we were in the background, though.”

The 3iQ offering is eye-catching because it brings a big-gun North American entity into the fray (it’s Canada’s largest digital investment fund manager, with more than US$2 billion assets under management) and one with laser focus on, and a weight of experience with, Bitcoin and crypto more broadly.

“So we’ve been around since 2012,” says Pye. “We began as a manager of a multi-asset momentum portfolio – and that’s basically owning seven of the top 12 performing asset classes in the world at any given point in time.”

‘We’re not just the regular asset manager trying to get the next hottest thing and jump into crypto… We’re bringing in a good eight to 10 years of solid experience with this.’

Pye adds that the firm made its pivot early, focusing purely on digital assets after he began to really understand, back in 2012, the value and potential of bitcoin (BTC).

“I discovered Bitcoin pretty early on and understood it very quickly and clearly. We then spent a few years working with and convincing regulators, aiming to bring bitcoin to the general public in Canada through a regulated platform.

“But digital assets is all we do and have done for a long time. We’re not just the regular asset manager trying to get the next hottest thing and jump into crypto… We don’t run any equity portfolios… so, you know, we’re bringing in a good eight to 10 years of solid experience with this to the Australian market.”

More Pye? Some further insights

In the course of our conversation with Fred Pye, the 3iQ CEO dropped some great quote bombs on the ETFs and crypto more broadly. Here are some of this thoughts:

… on whether this is a good time in the market to be launching crypto ETFs in Australia…

“I believe we’re actually lucky that Bitcoin is in a bit of a holding pattern here, so the funds will be established in your market by the time we have the next potential run up. I think the timing is excellent for us.”

… on how Australian crypto ETFs will be viewed globally…

“This is certainly being watched closely and with great interest. I think Canada and Australia can lead this, and see a positive follow-on effect elsewhere. 3iQ has a Bitcoin fund in Dubai already and we have another half dozen markets we’re looking at. Bitcoin trades 24 hours a day, seven days a week, so we’re trying to get all the time zones covered.”

… on crypto’s correlation to equities…

“It’s become blatantly obvious all asset classes are very highly correlated right now. And you know, when the printing machine stops, when inflation kicks in, hedge fund managers are always on the lookout for that perfectly non-correlated asset class. I think that before too long, a lot of institutions will start to look at Bitcoin and crypto like that.”

… on Bitcoin as an inflation hedge…

“As the US keeps posting 7%, 8% inflation numbers, you’re going to have serious problems with housing and stocks and growth stocks, which we’ve already seen. And I just think it’s the beginning. I think one of the best places to hide is in the digital asset space. The growth of blockchain proliferation is massive.”

‘We’ve seen that it can change lives… This is a digital asset revolution and the single largest technological advancement of our lifetime.’

… on younger generations’ investment preferences…

“The next generation – at least those we talk to, they’re not buying gold as their portfolio hedges, they’re buying Bitcoin and that movement is only going to gain pace.

“The demographics of the people investing in this is is huge, and it’s young people putting this asset class into their savings accounts. I mean, we’ve seen that it can change lives.”

… on investors dipping a toe into crypto…

“Bitcoin is always the first step, and then Ethereum is usually the second. But there are other, very important blockchains – other ‘layer 1s’, such as Polkadot, Cardano, Avalanche, Solana, Algorand – we’re bullish on all of them.”

… on the crypto industry in general and where it’s heading…

“This is a digital asset revolution and the single largest technological advancement of our lifetime. The next Bitcoin halving [50% supply reduction] comes around in about two years’ time, and we’ve seen what happens with that.

“I won’t make price predictions, but with BTC supply halved, demand continuing to grow, I’m comfortable to say that in two to three years the Bitcoin price should be significantly higher than where it is today.”

3iQ Digital Asset Management is a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.