The ASX could launch Australia’s first crypto ETF by the end of the year — but don’t expect Dogecoin to make the cut
Australia’s largest share market is on track to bring cryptocurrency investment to the mainstream, with an exchange-traded fund (ETF) in the works.
Four years on from the last boom and bust, the Australian Securities Exchange (ASX) has told Business Insider Australia that digital assets have now become too established for the exchange to turn a blind eye.
“You can see how mainstream this has become at an institutional level in developed markets, like the US, Canada, Europe, and the UK. You can’t ignore that. We can’t ignore it, and we’re not,” ASX general manager of listings Max Cunningham said.
“Local issuers who want to bring these products to market are not ignoring it either. So we are spending an enormous amount of time focused on this.”
While the ASX does not comment on potential listings, Business Insider Australia has confirmed with multiple sources that a number of ETF applications are currently being assessed by the exchange.
None wished to be identified by name in this article, but all have confirmed that the wheels are in motion.
It’s difficult to estimate when one might be approved, with both regulators and policymakers to varying degrees required to sign off on the assets, but some sources suggested they’re “optimistic” it would happen as soon as this year.
Cunningham wouldn’t be drawn on the issue, but would say that the huge demand for cryptocurrencies like Bitcoin and Ethereum meant that Australians were going to buy it one way or another.
“Because we were turning down a number of spurious offerings five or six years ago, there’s a perception that we have banned this asset class, and we have categorically not got a ban on it,” he said.
It follows similar comments made by regulator ASIC, which in February told a Senate committee that it did not object “in principal” to crypto ETFs.
The larger danger, Cunningham suggests, is that in not moving into the space remains that new investors will fall prey to less scrupulous operators.
“I think there’s an inherent obligation for us and the regulator and other other key decision makers to ensure that, if these assets are broadly being sought by retail investors, that we not only have the safeguards in place, but that we have good transparent and low cost mechanisms for them to access it,” he said.
It wouldn’t be the first ETF of its kind on the market. Canada became the first country in the world to list the first ever Bitcoin ETF earlier this year, amassing more than $US1 billion in assets in a single month.
However, a crypto ETF trading on the ASX would still have enormous implications. It would allowing Australians to buy a basket of the largest digital coins in a single transaction and in Australian dollars.
Perhaps more importantly it would go a long way to bringing the asset into the mainstream here. Essentially acting as the gatekeeper to the public Australian market, an ASX launch would enable everyday investors to own currencies like Bitcoin as part of their everyday share portfolio.
While there is evidently much work to be done, a publicly-listed option would also open up the asset class to Australia’s superannuation funds, which are currently unable to invest in it. Holding $3 trillion in retirement savings, even a small allocation to the asset class would see tremendous amounts of money flow into the largest crypto assets.
The ASX remains tight-lipped on the specifics of what is going on behind closed doors. What Cunningham will say is that the exchange is watching what happens in Canada and other markets very carefully.
“It’s an emerging asset class and it’s appropriate we put in time in the time and effort into what these assets might look like when they’re admitted to the public markets,” he said.
For one, it’s likely any initial offering would only include the market’s largest and most legitimate coins.
“The more important factor is, how’s the price being set? There’s volatility in all these assets for varying reasons but some of these more established assets have genuine institutional markets,” Cunningham said.
“Ultimately, it would be up to an applicant to demonstrate they have reference points to base a price on.”
Having crypto trading on the ASX will accordingly bring its own set of challenges. Just as the exchange does with traditional securities, it will keep a close eye on price manipulation of digital assets, with Cunningham acknowledging it remains “a concern”.
“There are some assets that are clearly speculative, [that have] a high level of [price] movement just by someone putting a tweet out. Some of these coins being established as jokes. We know that is what some of them are,” Cunningham said.
By that logic, it’s unlikely that Dogecoin – the meme coin that Elon Musk has helped push to a $US40 billion market cap –vwill get a run on the ASX boards.
While there’s plenty of work to be done first, crypto looks destined to go public in Australia.