Australia’s first crypto-ETF launched

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

Sydney-based ETF Securities’ bitcoin and ether spot ETFs, built in partnership with Swiss-based 21Shares, began trading this morning on the Australian stock exchange Cboe. Sydneysiders Cosmos Asset Management bitcoin feeder ETF was 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 number of European countries. So far, US regulators have only allowed cryptocurrency-based ETFs, while the UK has not even done so.

The Australian launches represent the culmination of a five-year battle in which ETF Securities first approached 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 unfavorably, albeit with the price of bitcoin falling below $ 30,000 for the first time since July this week, cementing a 50% drop from its November highs.

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 bitcoin’s recent sales too, this could provide an opportunity for investors to looking for attractive entry points to this new asset class. “

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

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

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

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

ETF Securities said the funds are an “important step in the mainstreaming of cryptocurrency ownership”, allowing investors to trade and own crypto in a “closely regulated environment under public oversight.”

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

For its part, Rashwan saw the listing as an “early entry point into the entire APAC region”, given Australia’s role as an investment center in Asia and the Pacific.

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

Established North American crypto managers 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 bids from 3iQ, which claims to be Canada’s largest $ 2 billion digital asset manager, will also be feeder funds.

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

VanEck also has experience in space, managing a bitcoin futures ETF and a private spot bitcoin fund in the US, and over a dozen banknotes traded on the spot crypto exchange in Europe, as well as a host of other offerings.

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

Arian Neiron, general manager of VanEck Asia Pacific, was not worried about whether rivals would enter the market first.

“For something as commodity-treated as bitcoin, it will depend on the quality and price of the product. ASX was our choice of exchange, and we are convinced that is the way to go,” he said.

Because Australians invest primarily through pension schemes, Neiron said, “they have a conservative disposition. They want a strong brand and a strong balance that is global and [a fund] which is on the ASX motherboard.

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