ASIC green lights ‘spot’ Bitcoin ETFs; other Australian crypto-focused ETFs already in progress
Link copied to
The Australian Securities and Investment Commission (ASIC) has reportedly given the green light for Bitcoin “spot” exchange traded funds (ETFs). Meanwhile two other Aussie crypto-focused ETFs are set to launch or already trading.
As of late last week, the Aussie financial markets regulator has given early approval to fund managers aiming to launch Bitcoin spot-backed ETFs. This comes after months of consulting with experts in the blockchain and crypto industry, such as peak body Blockchain Australia, local crypto exchanges and several others.
In a statement made on Friday, ASIC wrote, “We recognise the interest in, and demand for, ETPs and other investment products that hold crypto-assets in Australia. However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly.”
— James Seyffart (@JSeyff) November 1, 2021
Requirements for fund managers seeking to launch spot BTC ETFs include:
• Appointing a Bitcoin custodial expert who is “required to ensure crypto-assets are held in safe and secure custody”.
• Putting up/fronting a minimum of AUD $10 million in net tangible assets.
• Adhering to various other pricing, disclosure and risk-management obligations.
According to Business Insider, the regulator says it will still take a case-by-case approach to licensing cryptocurrencies for ETF listing. Bitcoin and Ethereum have so far been approved, though others are reportedly expected to be not far behind.
“We proposed this because we recognise that crypto-assets vary greatly in their features, characteristics, risks and how they operate,” ASIC said. “And we consider that only some may be appropriate to be held by a registered managed investment scheme.”
We’ll give you the short-ish answer.
Spot ETFs are generally regarded (at least within the crypto industry) as a better product than the futures-backed Bitcoin ETFs recently approved and trading in the US, such as ProShare’s BITO and Valkyrie’s BTF.
A spot-backed, or “physically backed” Bitcoin ETF allows a fund to take full custody of Bitcoin and track the actual price of the asset, instead of tracking derivatives-based Bitcoin futures. It provides a level of accuracy and stability that futures ETFs simply don’t have.
Bitcoin futures ETFs instead allow two parties to agree on buying or selling BTC at a predetermined price and date – essentially trading in IOUs that wind up as premiums or discounts to the actual BTC price.
The BetaShares crypto-tracking ETF is meanwhile launching on the Australian Stock Exchange this Thursday, under the ticker CRYP.
It’s a product that tracks the Bitwise Crypto Industry Innovators Index (BITQ), which Bitwise – one of the crypto industry’s biggest digital-asset managers – launched back in May, listing on the New York Stock Exchange.
Regarding the ASIC stance on effectively green-lighting crypto ETFs in Australia, BetaShares CEO Alex Vynokur said:
“This is a welcome development for those [Australian] investors and financial advisors who are seeking crypto exposure, but are uncomfortable with buying and selling cryptocurrencies on unregulated exchanges.
“In many ways, the inherent benefits of a regulated ETF – convenience, transparency and cost effectiveness – are additive for many investors seeking exposure to cryptocurrencies. We look forward to working with all relevant parties to bring a cryptocurrency ETF to Australian investors in the near future.”
Cosmos Asset Management, meanwhile, has already launched its own crypto-focused ETF – on ASX rival exchange, Chi-X, now trading under the ticker DIGA.
Cosmos is owned by Mawson Infrastructure Group, Australia’s largest digital asset miner and the first Australian digital miner to list in the US (NASDAQ ticker: MIGI).
Mawson Infrastructure Group (OTCQB:MIGI) has surged pre-market following listing of the first product by its Cosmos Asset Management business on the Chi-X …Read more: https://t.co/Zfxp5XAKZ6
— webnow🌎 (@webnowcompany) November 1, 2021
Mawson recently announced plans to open Australia’s largest Bitcoin mine in Byron Bay, according to the Australian Financial Review.
Concerned about the electricity that’ll chew through? It’s a mine that will reportedly be powered completely by renewable energy.
$MIGI is making Byron Bay home to Australia's largest bitcoin mine. 🌿
Mawson will deploy a new generation of its Modular Data Center, adding approx. 0.4 EH to the company’s global operations. 🌏https://t.co/N7rC24ZVpQ pic.twitter.com/CGw1Mqia7L
— Mawson (@Mawsoninc) October 28, 2021
The DIGA fund tracks the Global Digital Miners Index, designed by Cosmos Asset Management to provide investors with exposure to globally listed companies generating at least 80 per cent of their revenue from digital asset mining and infrastructure.
Chi-X Australia CEO, Vic Jokovic, said: “We are delighted to welcome the Cosmos Global Digital Miners Access ETF to Chi-X. Investor demand for access to advanced products and technologies, including
“By offering a product on an Australian regulated