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The TSXV Evolves on Mining

The Toronto Stock Exchange Venture Exchange (TSXV), once a haven for Canada’s many natural resource mining companies, is now becoming a sanctuary for miners of a different kind.

The TSXV is a venture capital exchange commonly used by mining exploration outfits to raise funds. Now, cryptocurrency miners are seeing potential in the exchange as a source of capital to build out computing capacity.

The latest company to register on the TSXV as of February 1 was CryptoGlobal Corp., a blockchain and fintech company mining bitcoin, dash, ether and litecoin.

Then there is Hut 8 Mining, a company, based in Vancouver, that is a reverse takeover (RTO) vehicle for Bitfury. The rig manufacturer and mining company has expressed its wish to rebalance the Bitcoin network’s mining activity away from China.

Hut 8, which raised $38 million last December in a private placement, is acquiring Bitfury’s North American operations. Hut 8 has reportedly signed a letter of intent with Oriana, a capital pool company that will amalgamate with it under the name Hut 8. This will be a qualifying transaction that lists Hut 8 on the TSXV. Executives originally planned to list on the TSXV in January, but this hadn’t happened as of early February. Media spokespeople for the company were unable to comment.

The TSXV is no stranger to public listings from companies in the blockchain space. In December, HashChain Technology went public on the exchange with its proposal for a 26,500-rig Dash and Ethereum mining operation. It joins HIVE Blockchain Technologies, a company that emerged from natural resources exploration firm Leeta Gold.

Other blockchain companies on the TSXV include BTL Group, formed after Northern Aspect Resources acquired Isle of Man–based Blockchain Tech Ltd. and its Vancouver-based incubator in 2015.

Blockchain investment fund Global Blockchain Technologies Corp. was delisted from the exchange on January 20.

Adam Button, chief currency analyst at currency trading data firm ForexLive, said that the TSXV is a common destination for companies following fashionable financial trends.

“TSX Venture is where all manias go,” he said. “It was marijuana this year, and next year it’ll be anything related to bitcoin.”

Kyle Kemper, executive director of the Blockchain Association of Canada, said that Canada has been a welcoming environment for cryptocurrency miners. He drew a direct line between the flurry of TSXV activity and China’s reported decision to discourage crypto-mining operations within its borders.

“Where some countries are discouraging bitcoin mining, Canada is actively attracting investment and we’re seeing it on the public markets,” Kemper said.

While blockchain firms tap the TSXV for traditional capital, the ICO markets could be a dark spot, warned Kemper.

In August 2017, the Canadian Securities Administrators (or CSA, the collection of provincial regulators) issued a staff notice on ICOs. A staff notice is a non-legally binding guidance document outlining the various provincial regulators’ likely approach. The notice said they would view each token sale on its own merits but added that they see ICOs as securities offerings aimed at retail investors. That would make it difficult to sell such tokens on exchanges.

There are some caveats, though. The CSA operates a “sandbox” designed to encourage fintech innovation, which lets eligible companies operate only under the regulation of their own province. This enabled Quebec’s impak Coin to operate as a regulated token in Canada.

Kemper remains unimpressed with the level of regulation in Canada.

“If the process to launch a project in Canada is too difficult, innovators will simply register elsewhere because their time is valuable and complying with onerous regulations, where they may or may not get approval, simply doesn’t make sense,” he said. “Regulators and policy makers need to understand that as we enter an AI-like society, companies and projects will domicile where the conditions are most favorable.”

All of which suggests that Canada is becoming the best and worst place to create a blockchain-related startup, depending on your business model. 

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