Category: ETFs

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Bitcoin ETFs Markets

Australian Asset Manager to Delist Crypto ETFs after 6 months

In the same year that Australia’s first crypto exchange-traded funds (ETF) launched — they’re ending: the asset manager behind the highly-anticipated ETFs has said that it intends to delist its funds that invest in Bitcoin (BTC) and Ethereum (ETH).

On November 2, Cosmos Asset Management advised the Cboe exchange of its plan to revoke its Bitcoin and Ethereum ETFs and that trading had been halted. 

Cosmos Company Secretary Hollie Wight said that after receiving “in-principle advice for Cboe that it will agree to the request”, the funds would be delisted effective from close of trade on Tuesday, November 8, 2022.

Bitcoin ETF Not Immune From Crypto Winter

It’s a disappointing end for the first Bitcoin ETF listed on the Australian stock market, but not totally surprising given broader crypto market conditions. 

Cosmos indicated that from November 9, the company would return funds to investors and that Cosmos would cover the funds’ closure costs.

“Subject to Cboe’s formal decision on the application, the responsible entity will commence the process on 9 November 2022 to redeem all investors at NAV as calculated by the Funds’ administrator and return their capital as soon as possible.”

Cosmos Company Secretary Hollie Wight

There was much hoopla when Cosmos launched its Purpose Bitcoin Access ETF (CBTC) and Purpose Ethereum Access ETF (CPET) funds in early 2022. The announcement was closely followed by news of competing Bitcoin ETFs from 21Shares.

But almost simultaneously the crypto winter was cooling the market. The price of Cosmos’ Bitcoin ETF has fallen around 19 percent since its launch in May.

CBTC price fall in the past year. Source: Cboe Australia
Categories
Australia ETFs Investing Regulation

Brisbane-Based ‘Monochrome’ Gets Approval for Spot-Based ETF  

A Brisbane asset management company will offer spot-based crypto exchange traded funds (ETFs), becoming the first to be authorised under an Australian financial services licence (AFSL).

Monochrome Asset Management announced on August 15 that it had gained approval from financial services regulator the Australian Securities and Investments Commission (ASIC) to operate spot-based crypto ETFs under an AFSL. 

The approval opens the door for retail investors to benefit from fully regulated and direct insured exposure to crypto assets, including Bitcoin and Ether. The funds will be headlined by the Monochrome Bitcoin ETF (ticker code: IBTC).

To date, no crypto asset ETFs operate under an AFSL with a crypto-asset authorisation. ASIC’s decision to provide this AFSL authorisation opens new regulated investment opportunities for direct retail investors and through licensed financial advisers.

Monochrome Asset Management

ASIC Approval Offers Regulated Crypto Investing

Monochrome’s spot-based crypto ETFs are not the first launched in Australia – that honour went to ETF products established by Sydney-based Cosmos Asset Management in May, followed closely by 3iQ’s launch of a Bitcoin and Ethereum feeder ETF in June. 

However, Monochrome being the first to operate an ETF under an AFSL – a licence issued by ASIC that’s required to run a financial services business – could be a key differentiator for investors seeking trustworthy advice and investment vehicles.

Monochrome CEO Jeff Yew said that in addition to meeting market demand, its ETF would give crypto investors the protection of a “much higher degree of regulation”.

The regulator’s approval of this licence variation represents a major step forward for both the advice industry and retail investors, allowing advisers to meet the market demands of their clients when it comes to the nascent crypto-asset class. 

Jeff Yew, CEO, Monochrome Asset Management
Categories
ETFs Kucoin NFTs

KuCoin Becomes First Exchange to Offer NFT ETFs

Popular crypto firm KuCoin has become the first centralised exchange to launch a non-fungible token exchange-traded fund (ETF), as per a recent announcement.

KuCoin has partnered with Fracton Protocol to launch Trading Zone ETF, and it aims to increase liquidity to the exchange’s more than 20 million users and lower the investment threshold for these assets:

KuCoin Going All Out on NFTs Despite Market Downturn

The ETF will offer investors exposure to blue-chip NFTs that can be directly purchased with Tether (USDT). As such, the ETF is made up of five popular NFT collections including BAYC (hiBAYC), CryptoPunks (hiPUNKS), Koda NFTs (hiKODA), hiSAND33 and hiENS4.

We are very excited to become the first centralised crypto exchange to support NFT ETFs that allow users to conveniently invest and trade top NFTs directly with USDT. In the future, KuCoin will keep exploring more NFT-related products for our users.

KuCoin blog post

KuCoin has been working on developing several NFT-related products and services this year. In April, it launched two NFT launchpads, Wonderland and Windvane. The firm said it would continue to roll out more NFT and Web3-related features in the future.

While KuCoin is the first crypto exchange to launch an NFT ETF, FinTech firm Defiance was already one step ahead with the world’s first NFT ETF, launched on December 2 last year.

Categories
Bitcoin ETFs

World’s First Short BTC ETF Sees Interest Explode 300% in Days

Following its hotly anticipated launch two weeks ago, the Proshares Short Bitcoin exchange-traded fund (BITI) initially got off to a rather lacklustre start. However, according to Arcane Research, interest of late has soared by over 300 percent:

BTC short ETF inflows. Source: Arcane Research

Betting on More Downside?

As bitcoin managed to claw its way above US$20,000 amid ongoing fears of a recession, investors appeared to take a particular liking to BITI, resulting in some US$51 million worth of inflows over the past week.

Speaking to CoinDesk, Pawel Cichowski, the head of dealing at crypto exchange XBO, suggested that market consensus appeared to favour more pain on the horizon:

People who are involved in the market think that the bottom is still to come, so if they can’t make money on the rise, they want to make money on the fall by shorting Bitcoin.

Pawel Cichowski, head of dealing, XBO

Cichowski added that “with signs of a global recession coming up and the bond yield curve inverting, nobody knows for sure where the price of bitcoin will go next. However, based on ProShares statistics, people are preferring to expect the worst”.

Inflows Back into Crypto Mask the Reality

In its latest report, CoinShares reveals that despite a lack of good news, investment flows are returning to crypto products:

Daily crypto inflows. Source: CoinShares

Analysts were however quick to note that despite seeing inflows of US$64 million over the past week, the “headline figures obscure the fact that a significant majority were into short-bitcoin investment products (US$51 million)”.

Addressing the issue of whether increased inflows into BITI offered evidence of renewed negative sentiment, CoinShares argued that it was possibly instead due to “first-time accessibility”, reflected by some US$20 million inflows into bitcoin long products from Canada and Europe (Germany in particular).

Whatever the reality, the figures in question remain a long way off recent record weekly outflows of US$423 million, witnessed shortly after news broke that Celsius was in trouble and the contagion that followed.

As bitcoin continues to trade in the US$17,500 to US$20,000 band, it remains unclear whether the bottom is in. Of course, for those with conviction dollar-cost-averaging over the long term, it’s perfectly irrelevant:

HODLers don’t focus on the price. Source: In Bitcoin We Trust
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Bitcoin Crypto News Cryptocurrency Law ETFs Regulation

US Regulator Sued by Grayscale After Latest Bitcoin ETF Rejection

Historically, the Grayscale Bitcoin Trust (GBTC) was the primary vehicle for US institutional exposure to bitcoin. As jurisdictions including Australia and Canada approved spot bitcoin exchange-traded funds (ETFs), the Securities and Exchange Commission (SEC) resisted. Once again, it has rejected appeals to approve a bitcoin ETF, and this time it is getting sued:

Grayscale Committed to a Spot Bitcoin ETF

As news broke that the SEC had rejected its application to convert GBTC into an ETF, Grayscale moved swiftly to file a petition for review with the US Court of Appeals for the District of Columbia Circuit.

Speaking on CNBC’s Squawk Box, chief executive Michael Sonnenshein commented that Grayscale was “of course very disappointed, but as an organisation [we] were ready”. He added that the firm “almost immediately” filed a petition for review as it “vehemently disagreed with the decision”.

When asked for the basis for Grayscale’s legal challenge, Sonnenshein responded:

The SEC is acting arbitrary and capricious by continuing to approve Bitcoin futures based ETFs while continuing to deny spot Bitcoin ETFs.

Michael Sonnensheim, CEO, Grayscale

Nonetheless, Grayscale has said that it remains “committed” to converting the GBTC into an ETF, adding that:

Through the ETF application review process, we believe American investors overwhelmingly voiced a desire to see GBTC convert to a spot Bitcoin ETF, which would unlock billions of dollars of investor capital while bringing the world’s largest Bitcoin fund further into the US regulatory perimeter. We will continue to leverage the full resources of the firm to advocate for our investors and the equitable regulatory treatment of Bitcoin investment vehicles.

Grayscale press release

‘Poked the Wrong Nest’

In a rare display of unity between Bitcoiners and the crypto community, both sides agreed that pushback was needed against the SEC’s decision, with on-chain analyst Will Clemente saying:

Others commented that the SEC’s decision “lacked substance” or “common sense”:

Tellingly, during Grayscale’s 240-day review, a record-breaking 11,400 submissions were received with over 99 percent demonstrating support for the conversion.

Even though a final decision is only likely to be reached within the next 12 months, it appears as if the SEC may well have poked the wrong nest. Bitcoiners, in particular, have a tendency to make their voices heard.

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Australia Crypto News ETFs Investing Surveys

Millennials Prefer Crypto Over Investment Funds: Survey

A new survey conducted among young adults aged 25 to 40 in the US by French investment firm Alto reveals that more millennials are investing in crypto than in mutual funds.

According to Alto’s report, titled “How Millennials See Their Financial Future”, nearly 40 percent of the survey’s millennial respondents have invested in cryptocurrencies.

Coincidentally, the same percentage of Australian millennials indicated their preference for digital assets over real estate in a similar survey conducted by international crypto exchange Kraken almost exactly a year ago.

Another survey conducted by Australian online investment broker Pearler in May 2021 indicated that “a significant number” of Aussie millennials intended to retire at the age of 50 using their investments in exchange-traded funds (ETFs) and cryptocurrencies.

Current Market Conditions Dissuade Potential Investors

The 40 percent figure mentioned in the latest Alto survey also mirrors the proportion of American millennials who own stocks. The report notes that most millennials either already own crypto or are considering buying some, though Alto founder and CEO Eric Satz concedes that current conditions make it hard for them to consider investing:

In a world of conspicuous consumption, soaring living costs, and mounting student loan debt, millennials find it difficult to invest for the future because they are struggling to afford the present.

Eric Satz, founder and CEO, Alto Investing

Seven in 10 Millennials Intend to Add Crypto to Their Retirement Funds

Participants in the Alto survey who currently hold digital assets mentioned they were likely to add more crypto to their retirement portfolios. This cohort amounted to 70 percent of millennials surveyed.

Other key findings of the Alto survey included:

  • 74 percent of millennials thought that pouring money into the stock market should be considered gambling, whereas 70 percent were of the opinion that such actions were way too dangerous; and
  • 76 percent believed they could essentially be left without any savings if the bears continued to reign supreme on the crypto market.
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Bitcoin Crypto News ETFs

ProShares Launches First Short Bitcoin ETF

ProShares, a global exchange-traded fund (ETF) provider, has launched an ETF enabling investors to bet against bitcoin, otherwise known as “going short”:

Profiting Off Bitcoin’s Decline

The ProShares Short Bitcoin Strategy ETF, scheduled to commence trading under ticker symbol BITI on June 22 on the New York Stock Exchange, enables investors to “short sell” bitcoin.

Unlike most investments which speculate on the price appreciating, short selling involves the opposite – betting that the asset in question will decline. In a statement, ProShares CEO Michael Sapir commented that conditions were ripe for the product:

As recent times have shown, Bitcoin can drop in value. BITI affords investors who believe that the price of Bitcoin will drop with an opportunity to potentially profit or to hedge their cryptocurrency holdings.

Michael Sapir, ProShares CEO

BITI purports to deliver the inverse of the performance of the S&P CME Bitcoin Futures Index, and it will obtain exposure through Bitcoin futures contracts.

The launch is rather timely, given bitcoin’s recent unprecedented decline below 2017’s previous all-time high. Since November last year, the overall cryptocurrency market has shed US$2 trillion from its market capitalisation, peaking at US$2.9 trillion and currently hovering around US$900 million.

Bitcoin 1 month performance (USD). Source: Coinbase

SEC Drags its Heels on Spot Bitcoin ETF

Despite other jurisdictions such as Canada and Australia having multiple spot bitcoin ETFs, as the world’s largest financial market the US is yet to get one of its own. The US regulator, the Security and Exchange Commission (SEC), has repeatedly denied spot bitcoin ETFs, citing “market manipulation” as one of several reasons for failing to approve one.

Remarkably, investors in the US now have the option to invest in bitcoin futures, as well as bet against bitcoin, but they still cannot invest in an ETF tracking its price:

Commentators on Twitter appeared baffled by the decision, describing it as “intentional”, with others saying it was unequivocally clear that the SEC had an agenda:

The news comes in as Grayscale remains committed to converting its Grayscale Bitcoin Trust into an ETF, and just yesterday, Bloomberg reported that Anthony Scaramucci’s SkyBridge was scheduled to file for a spot bitcoin ETF this week.

Pressure is mounting on the SEC. How much longer can it continue to deny a spot bitcoin ETF? The longer the situation persists, the more difficult it is to argue that its decision-making isn’t political.

Categories
Australia Crypto News ETFs

3iQ Launches Australian Bitcoin and Ethereum ETFs

Digital asset investment fund manager 3iQ has announced the launch of a Bitcoin and Ethereum feeder exchange-traded fund (ETF) in Australia, allowing investors to gain exposure to both cryptocurrencies.

Both ETFs launched on the Cboe Australia exchange on June 6. Investors will be able to buy units of both ETFs directly with Australian dollars at the lowest fees available in the country. The total management expense ratio is 1.20 percent.

The ETFs feed from the firm’s Canadian-based underlying ETFs listed on the Toronto Stock Exchange (TSX): the 3iQ CoinShares Bitcoin ETF and iQ CoinShares Ether ETF.

We are delighted to launch the 3iQ CoinShares Bitcoin Feeder ETF and the 3iQ CoinShares Ether Feeder ETF on the Cboe today. Our ETFs give retail and institutional investors regulated access to the digital asset market, providing a safer alternative to a direct investment in cryptocurrencies.

Fred Pye, chairman and CEO, 3iQ

Australia Officially Has 3 BTC ETFs

While the US Securities and Exchange Commission is rejecting crypto ETF applications left and right, Australia officially has three Bitcoin ETFs:

The news comes after Crypto News Australia reported a month ago that the first Australian BTC and ETH ETFs, also listed on Cboe Australia, had gone live.

However, the launch of the ETFs didn’t go as expected as on their first day of trade, none of the funds was able to reach A$1 million in trading volume.

Categories
Australia Crypto News ETFs

Bear Market Sees Aussie Crypto ETF Volumes Dry Up

Australia’s long-awaited and much-debated exchange-traded products are finally in circulation and investors seem … less than impressed. Since the May 12 launch of three ETFs, trading volumes have only been on the decline.

ETF Drought Sets In

Only two weeks ago it seemed that these Australian ETFs had fizzled out on debut, with none of the three new funds (CBTC, EETH and EBTC) able to crack the A$1 million volume benchmark. In the period since launch, sales have only continued to fall, with the current bear market showing an apparent ETF volume drought.

Market Looks to the Cosmos

However, the Cosmos Purpose Ethereum Access ETF (CPET), heralded as the “world’s first physically settled ether ETF”, has just hit the market with high hopes:

CPET saw 2,073 shares change hands on May 31, its debut day. How successful it will be in Australia is yet to be determined. While some are hailing CPET as the kick crypto ETFs need to increase their volumes, as of June 1, the daily return on the newcomer was -5.88 percent.

Aussie ETFs Slow off the Mark

The initial development of Australian-based Bitcoin ETFs had been delayed by several factors, with the journey to launch being long and fraught. Their creation was hampered by high collateral requirements at the beginning of April, with fund managers claiming these were making it difficult for clearing participants to agree to trade the ETFs.

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Australia ETFs Investing Markets

Australian Crypto ETFs Fizzle on Debut, Only $2 Million in Volume

This week’s long-awaited launch of the first Australian crypto ETFs went off not with a bang but with a fizzle, as the investment products were released amid some of the darkest days in the history of crypto.

Since May 11 Australians have been able to invest directly in three Bitcoin and Ethereum exchange traded funds (ETFs) listed on Cboe Australia, through two providers. 

All three new crypto ETFs had trading volumes far below what was predicted, as the Terra blockchain collapse continued to wreak havoc across the entire crypto market, with Bitcoin plunging to levels not seen since 2020 and Ethereum falling to a six-month low.

All Three ETFs Attract Little Interest 

On their first day of trade, none of the newly launched funds was able to crack A$1 million in trading volume:

  • ETF Securities’ issued ETFS 21Shares Bitcoin ETF (EBTC) saw investor inflows of A$954,925. 
  • ETF Securities’ Ethereum fund ETFS 21Shares Ethereum ETF (EETH) attracted just A$604,305.
  • Cosmos Purpose Bitcoin Asset ETF (CBTC), issued by Sydney-based Cosmos Asset Management, fared worst, securing only A$454,002 in investor funds.

These numbers compare poorly with the launch of the BetaShares Crypto Innovators ETF (CRYP) – a fund that doesn’t invest directly in crypto but rather in crypto-related shares, such as Coinbase – which did over A$8 million in trade within 15 minutes of its listing on the Australian Securities Exchange (ASX). To be fair, though, that fund launched when Bitcoin was at an all-time high last November and the crypto market was on the ascent.

Why the Poor Start?

The new funds launched during a full-blown crisis in crypto markets, the magnitude of which we haven’t seen for years, if ever. It makes sense that concerned investors would be less inclined to get into crypto under current conditions.

The collapse of the Terra blockchain has sparked a US$450 billion drop in the overall crypto market cap since May 7, in a single week. According to CoinGecko, the price of Bitcoin has dropped by almost 25 percent in the past fortnight alone and now sits at US$29,531. 

In addition, the unusually high 42 percent margin requirement imposed on the new ETFs by national clearing authority, ASX Clear, has made the funds less attractive to market participants, meaning major brokers and platforms are refusing to support the ETFs.

Due to the high margin requirements and higher volatility of the underlying assets, some brokers who are selling the ETFs are also only allowing sophisticated investors to trade and are charging additional fees for the privilege.

Another factor likely affecting demand is that investors can already easily access Bitcoin and Ethereum directly, simply by purchasing the assets from a crypto exchange.

The race to launch the first crypto ETF in the Australia market was closely contested, with these three Australian-based crypto ETFs just beating out funds from Canadian challenger 3iQ Digital Asset Management.