Australia’s First Crypto ETF Launched

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The five-year race to launch the first locally traded cryptocurrency funds in the Asia-Pacific region ended on Thursday in a stalemate.

Sydney-based ETF Securities’ bitcoin and ether spot ETFs, built in partnership with Switzerland-based 21Shares, began trading on the Australian exchange Cboe this morning. Sydneysiders Cosmos Asset Management bitcoin feeder ETF also launched today on the same exchange.

The lists mark the latest step in the globalization of exchange-traded products investing in “physical” cryptocurrency, which until now has only been available in Canada, Brazil and a host of European countries. So far, US regulators have only allowed crypto futures-based ETFs, while the UK hasn’t even done so.

The Australian launches are the culmination of a five-year battle, with ETF Securities being the first to approach regulators with the idea of ​​launching a crypto ETF in 2017.

The long gestation period is coming to an end just as digital currencies have fallen out of favor, but the price of bitcoin this week plunged below $30,000 for the first time since July, marking a 50% drop from the highlights of November.

Nevertheless, Kanish Chugh, Head of Distribution at ETF Securities said: “Australian investors’ interest in cryptocurrencies has not waned in recent months, although we have seen some underperformance. And with the recent sell-off in bitcoin, this could present an opportunity for investors. who are looking for attractive entry points to this new asset class.

ETFS and Cosmos hope to gain “first mover advantage” in the market, New York-based VanEck is expected to launch a competitive product in the coming weeks on the ASX, Australia’s premier stock exchange, and Canadian company 3iQ Digital Asset Management will launch another ETF on the Cboe Australia exchange.

Both ETFS and Cosmos had planned to launch their funds two weeks ago, but at the last minute a problem arose with what 21Shares CEO Hany Rashwan called a “downstream infrastructure provider,” such as a prime broker or clearer. This is now believed to be resolved.

The products have different approaches. The Cosmos Purpose Bitcoin Access ETF (CBTC) is a feeder fund that will purchase units of the $1.1 billion Purpose Bitcoin ETF (BTCC), listed in Toronto in February 2020. The total fee will be 1.25%.

In contrast, the 21Shares Bitcoin ETF (EBTC) ETFS and the 21Shares Ethereum ETF (EETH) ETFS will invest directly in the underlying securities. They are built in partnership with 21Shares – the world’s largest crypto ETP manager with more than 30 products and $2.5 billion in assets under management – who will provide research and operational support. The fee for both is 1.25%.

ETF Securities said the funds are a “significant step in mainstreaming cryptocurrency ownership,” allowing investors to trade and own crypto in a “highly regulated environment under government oversight.”

“Until now, Australians looking to buy bitcoin or ether have been forced into unregulated crypto exchanges, which come with weaker investor protections,” he added.

For his part, Rashwan saw the listing as a “first gateway to the entire APAC region”, given Australia’s role as an investment center in Asia-Pacific.

Rashwan, who launched the world’s first crypto ETP in Zurich in 2019, added that 21Shares was “looking at several dozen countries around the world” with the aim of launching more such vehicles. “We are expanding beyond Europe,” he said.

Established North American crypto executives are also eager to gain a foothold in the Australian – and broader Asian – market, even if they have been beaten at the right time.

Planned offerings from 3iQ, which claims to be Canada’s largest digital asset manager at $2 billion, will also be feeder funds.

The 3iQ CoinShares Bitcoin Feeder ETF and 3iQ CoinShares Ether Feeder ETF, which will also be listed on Cboe Australia, will buy shares of two existing ETFs listed on the Toronto Stock Exchange.

VanEck also has experience in the space, managing a bitcoin futures ETF and a privately held spot bitcoin fund in the US, and more than a dozen notes traded on spot crypto exchanges in Europe, among a wide variety of others. offers.

The proposed Australian ETF will invest directly in bitcoin and will be listed on the ASX, which last week officially added digital assets to its list of eligible underlying assets for exchange-traded funds.

Arian Neiron, general manager of VanEck Asia Pacific, was not concerned about rivals entering the market first.

“For something as prevalent as bitcoin, it depends on the quality of the product and the price. ASX was our choice of exchange and we believe it is the right choice,” he said.

Because Australians mainly invest through pension schemes, Neiron said, “they have a conservative mindset. They want a strong brand and a strong balance sheet that is global and [a fund] located on the motherboard of the ASX.

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