After many years of waiting, Australians who want to invest in cryptocurrency assets without running the risk of buying coins directly will finally get their chance with the looming launch of a range of crypto-focused exchange traded products.
Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), has finally allowed a number of cryptocurrency-related ETFs, which should see Bitcoin and Ethereum-backed investment funds trade on ASX in the coming months.
This move follows the launch of the first Bitcoin futures ETF in the US, following a lengthy regulatory process, and the successful launch of a Canadian ETF earlier this year.
The first local ETF out of the blocks on ASX is probably the Australian fund manager BetaShares, which has signed up those interested in an exchange-traded product made up of a number of global crypto companies.
CRYP racing to get a list
Using the ASX ticker CRYP, the fund could be launched as early as next week and will offer exposures to a number of “pure-play” crypto companies with balances deeply rooted in crypto assets, along with diversified companies with a crypto. focus.
The new ASIC guidelines, which cover crypto-traded products, include a number of safeguards that should protect investors from some of the more serious scandals that have plagued the crypto industry.
Strict safety guidelines
Companies offering crypto-ETFs must accept a set of best practice guidelines, including strict rules regarding the safekeeping of assets, including the protection and safekeeping of private keys to cryptocurrencies.
Such keys must remain in cold storage and not connected to the Internet with wallets in which the keys are stored are subject to “robust physical security practices”.
Multiple backups must also be made and stored in geographically separated locations.
Depository holders of cryptocurrencies will also be required to have increased cybersecurity protocols, and the ASIC said it expects funds offering crypto-ETFs to provide some form of compensation to investors if their cryptocurrencies are lost or stolen. .
The funds must also apply for an extended financial services license that specifically allows the storage of cryptocurrencies.
The ASX role will limit offered coins
ASX will also be required to assess which cryptocurrencies are acceptable to an ETF, including institutional support, ensuring a range of reputable asset service providers, a mature spot market, a regulated futures market and transparent pricing mechanisms.
It is likely to limit initial offers to the two largest cryptocurrencies, Bitcoin and Ethereum, although other currencies may fit the bill over time.
The Betashares Fund is planned to have 85% of its investments in companies whose income comes directly from serving cryptocurrency markets, or to have at least 75% of their assets in crypto stocks, such as crypto trading platforms, miners and the companies that supply their equipment. .
The remaining 15% of the index will consist of investments in diversified large-cap companies that overlap with the crypto ecosystem through at least one industry.
Some of them include Coinbase, the largest US-based cryptocurrency exchange (COIN), Bitcoin mining company Riot Blockchain (RIOT) and business intelligence firm Microstrategy (MSTR).
Australians are already investing in coins
BetaShares CEO Alex Vynokur has said that almost two million Australians have already invested directly in cryptocurrency, but the market should expand when funds are available that do not come with the speculative risk of investing directly in tokens.
He said the Betashares fund wanted to focus on bringing investors the best of the crypto ecosystem’s ‘innovators’ in an effort to challenge a range of industries with a “pick and shovel approach”.
Canada became the first country in the world to list a Bitcoin ETF earlier this year, raising more than $ 1 billion in assets in a single month. The US followed this track last week when the first bitcoin futures ETF debuted for trading on the New York Stock Exchange.