Category: ETFs

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Australia Bitcoin ETFs Ethereum

Australia’s First Bitcoin and Ethereum ETFs Go Live

Today marks a historic day for the Australian investment landscape as retail and institutional investors are now able to invest in the newly launched Bitcoin and Ethereum exchange traded funds (ETFs) listed on Cboe Australia (“Cboe”):

Off the Ground, Despite False Starts

For market participants, the road to Australia’s first spot-based crypto ETF has been a long and, at times, painful journey. Some two weeks ago, regulators gave the green light but within days the launch was delayed due to an issue relating to the prime dealer.

With that out of the way and more ETFs likely on the horizon, Australians now have a choice to invest directly in three ETFs through two providers, becoming only the eighth country to do so.

21 Shares will offer both an ETH and BTC ETF, whereas Cosmos will list only an ETH ETF, at least for now. Each of the ETFs will hold the crypto assets offshore in cold storage, and track the spot price of each in Australian dollars.

The news elicited much excitement, with some indicating that they expected significant capital inflows:

ETF Securities chairman Graham Tuckwell, who earlier criticised regulators for dragging their heels, commented: “Today is an exciting day for our team, a culmination of months of hard work to bring these ETFs to the Australian market. EBTC and EETH are true firsts for Australia, and we are excited to be launching with Cboe Australia.”

ETF Securities head of distribution Kanish Chugh recognised that while current market conditions were not ideal, they did provide a good entry point for new investors:

Australian investor interest in cryptocurrencies has not waned in recent months even as we have seen underperformance, and with Bitcoin’s recent sell-off as well, it may present an opportunity for investors who have been looking for attractive entry points into this new asset class.

Kanish Chugh, head of distribution, ETF Securities

Cboe Australia CEO Vic Jokovic expressed delight at the “breakthrough products”, saying they paved the way for “more Australians to expose their portfolios to cryptocurrency in a regulated manner”.

Although the caveat “not your keys, not your coins” holds true, the listings provide clear evidence of growing mainstream adoption, a trend that is only likely to accelerate.

Zero Chance of BTC Going to Zero

One wonders how local fund managers such as Hamish Douglass have taken the news, particularly since he thinks bitcoin will go to zero. Australian podcaster Mission Bitcoin suggests that those who believe it will be worth zero are simply not paying attention:

Given Bitcoin’s fundamentals and increased role in the global economic landscape, it’s difficult to disagree with that sentiment.

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Australia Crypto News ETFs Regulation

Senator Bragg Intervenes in Crypto ETF Race, Backing Local Investment Managers

Andrew Bragg, an Australian Liberal Senator and pro-crypto lawmaker, has requested that the Australian Securities and Investments Commission (ASIC) back local investment managers for the first Aussie crypto exchange traded fund (ETF).

Senator Bragg has addressed a letter to ASIC strongly recommending that the interests of Australian investment managers are kept in mind as the country’s first crypto ETF moves closer to fruition. The letter stated:

It would be a very regrettable outcome if foreign exchange-traded funds with direct exposure to cryptocurrency were widely available before domestic products.

NSW Senator Andrew Bragg to ASIC chairman Joseph Longo

While Bragg said he would not retaliate against the development of digital assets by foreign companies, he suggested that ASIC prevent them from capitalising on the delays that local firms are experiencing. The planned Aussie ETFs were supposed to have been greenlit a week ago, and Bragg expressed that he would be hesitant to see foreign products dominating Australian ones.

'This is a good and fair idea': Liberal senator Andrew ... https://www.theage.com.au/politics/federal/this-is-a-good-and-fair-idea-liberal-senator-andrew-bragg-backs-indigenous-voice-to-parliament-20190724-p52adz.html
NSW Senator Andrew Bragg backs local crypto ETFs.

Crypto ETFs: Momentum and Setbacks

April 2022 saw the Australian crypto ETF race heat up following the announcement of two more listings being ready to launch. These include the first Ethereum ETF and another Bitcoin ETF.

However, a week ago it was announced that the first crypto ETFs had been delayed due to an issue with an undisclosed third-party broker. This follows several tumultuous months. The hold-up was allegedly the result of standard checks prior to trading – no further information was given.

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Airdrop ETFs NFTs Regulation

VanEck Community Airdrop ‘NFT to Function Like a Digital Membership Card’

US asset management firm VanEck has announced that the first NFT of its upcoming collection is set to be launched and delivered via Airdrop. The collection will follow “Hammy” (Alexander Hamilton, the first US Treasury Secretary) and his journey through monetary policy’s past, present and future.

265 Alexander Hamilton Ten Dollar Bill Photos - Free ... https://www.dreamstime.com/photos-images/alexander-hamilton-ten-dollar-bill.html
US monetary policy pioneer Alexander Hamilton set to become an NFT.

For the first 1,000 of those who signed up for the project, the initial Airdrop takes place this week. At the end of the month, each purchased NFT will transform into a unique avatar that permits exclusive access to content produced by VanEck.

https://www.linkedin.com/in/mattbartlett1/overlay/photo/

The use of this NFT allows us to build an exclusive community where members who hold said NFT are invited to experiences and events where they can network with like-minded investors and crypto enthusiasts.

Matthew Bartlett, internal sales manager, VanEck

The major selling point of the collection will be the exclusive access it grants to in-person and digital events. It is intended to be an “NFT [that] functions as a digital membership card”, with the collection split into three tiers – common, rare, and legendary, with the latter tier having only 20 NFTs in circulation. The higher your NFT’s ranking, the more exclusive benefits will be available to you.  

Airdrops Gain Traction

Airdropping is now a popular method of dispensing crypto and NFTs to users. Last month, Ethereum scaling solution Optimism announced plans to utilise Airdrop to help its new token, OP, take off. It plans to feature several more Airdrop-based events, the next scheduled for a yet-to-be-announced date in Q2.

In other recent, less positive news regarding VanEck, November 2021 saw its rejection by the US Securities and Exchange Commission (SEC) regarding ETF manipulation concerns. VanEck’s application for the Bitcoin ETF was denied as the fund allegedly did not meet its burden under the Exchange Act and the SEC’s Rules of Practice.

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Australia Bitcoin ETFs Ethereum

Canadian Challenger Joins Australian ETF Race

A Canadian challenger could blow open the Australian crypto exchange-traded fund (ETF) race as it moves to seize an opportunity to make history by listing Australia’s first ETF.

According to a report in the Australian Financial Review, Toronto-based 3iQ Digital Asset Management has applied to launch two ETFs after a technical delay held up rival investment houses. The crypto specialist firm lodged disclosure documents with the Australian Securities and Investments Commission (ASIC) late last week. These documents revealed its plans to list the 3iQ CoinShares Bitcoin Feeder ETF and 3iQ CoinShares Ether Feeder ETF on the Cboe Australia exchange.

The fund will give exposure to both Bitcoin and Ether by buying units in two of 3iQ’s existing ETFs, which are listed on the Toronto Stock Exchange and co-managed by London-based CoinShares. The funds will trade on Cboe under the tickers BT3Q and ET3Q.

Technical Challenges Delay ETF Race

Local issuers ETF Securities and Cosmos Asset Management had expected their pending ETFs to begin trading on April 27, but were unable to launch after Cboe told the market “standard checks” were still ongoing. Both ETFs are still yet to begin trading.

The hold-up was caused by a powerful but undisclosed “prime broker” who required more time to support the new asset class, forcing a delay in trading. This presented 3iQ with the opportunity to get ahead of its competitors and list Australia’s first ETF to be invested directly in digital assets.

Australian ETF Race Heats Up

Australia appears to be leading the ETF charge ETFs. In December 2021 the country saw its first spot crypto ETF, which launched through ETF Securities and 21Shares. Early last month, it was announced that Australia would soon receive its first Bitcoin ETF. Since then a slew of competitors – Cosmos Asset Management Bitcoin ETF, 21Shares Bitcoin ETF, and 21Shares Ethereum ETF – were set to follow suit by launching their own crypto ETFs.

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Bitcoin ETFs Gold

World’s First Hybrid BTC and Gold ETF Launched

The world’s first combined Bitcoin and Gold exchange traded fund (ETF) has been launched this week in Switzerland. The product has been developed by ETP issuer 21Shares and cryptocurrency data provider ByteTree Asset Management.

The first ETF product to combine gold and and what has now become known as digital gold – bitcoin – in a single fund was launched on the SIX Swiss Exchange. As Charlie Morris, chief investment officer at ByteTree Asset Management, has said, “We are making bitcoin an acceptable asset to hold and bringing gold into the 21st century.”

ByteTree and 21Shares Make BOLD Move

ByteTree Asset Management BOLD ETP will track a customised benchmark index comprising bitcoin and gold, which rebalances monthly according to the comparative volatility of the two assets. Whichever of the two has been less volatile over the previous 360 days will be given the higher weighting. At launch, the weighting will be 18.5 percent bitcoin and 81.5 percent gold.

While gold ETPs and spot bitcoin ETPs are both widely available independently, at least in continental Europe, Morris claimed that ByteTree’s active rebalancing strategy had improved returns by seven to eight percentage points a year in backtesting. Morris added: “It struck me that bitcoin and gold were always counter-cyclical. It’s obvious to me that bitcoin has always been correlated to the stock market, or to risk assets in general.”

According to Charlie Erith, CEO of ByteTree Asset Management, the investment strategy is “a unique approach to blending a high return digital asset with a traditional store of value, with a low correlation to equities and bonds”. He added:

Gold has historically delivered portfolio protection in inflationary environments, while bitcoin is the digital equivalent of gold with growing adoption by investors as a distinct asset class and a core store of wealth … In a time of rising structural inflation and heightened geopolitical risk, we believe this can act as an important risk and return diversifier in a balanced portfolio.

Charlie Erith, CEO, ByteTree Asset Management

21Shares Has Form in ETF Space

21Shares has been very active in launching ETFs, after releasing a product in December 2021 that provided Australian investors with access to the country’s first direct Bitcoin and Ethereum ETFs.

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Australia Crypto News ETFs

Australia’s First Crypto ETFs Delayed ‘Due to Prime Broker’

Australia’s first crypto exchange traded funds (ETFs) have been delayed at the last minute with an undisclosed third-party broker said to be responsible for preventing trade that was otherwise scheduled to commence yesterday.

A Disappointing Start

Following last week’s approval by Australian regulators of a Bitcoin and Ethereum ETF, executives at fund managers Cosmos Asset Management and ETF Securities were no doubt eagerly awaiting the launch of their historic investment products.

After months of endless delays and hiccups, their excitement surely soured as Cboe Australia confirmed late on Tuesday that none of the ETFs would begin trading at 10am on April 27. According to its statement, this was on the basis that “standard checks prior to the commencement of trading [were] being completed”. The exchange declined to provide any further details.

Despite the setback, Kanish Chugh, head of distribution of ETF Securities, remained upbeat, describing it as a “temporary delay” through “no fault whatsoever of ETF Securities, our ETFs, or the exchange”. He added:

We believe the issue affects all fund managers equally and has caught everyone by surprise. We are working to resolve this as quickly as possible and remain on track to launch Australia’s first bitcoin and ethereum ETFs.

Kanish Chugh, head of distribution, ETF Securities

‘Prime Broker’ Responsible

According to Cosmos and ETF Securities, the delay was due to a “service provider downstream” who needed more time to support trade. While details remain murky, it’s understood that the responsible party is a “prime broker”, a market participant whose approval is required for smooth market making operations.

Eager to clear its name, an Australian Securities Exchange (ASX) spokesman said its position had not changed and that “matters are now in the hands of the trading venues [in this case, Cboe] and their issuers and brokers”.

Other fund managers such as VanEck Australia and Monochrome Asset Management have also applied to list crypto ETFs, although on the main ASX exchange. To date, they haven’t lodged product disclosure statements with the Australian Securities and Investments Commission (ASIC), implying a “wait-and-see” approach rather than striving to be first.

Time will tell which approach works better. Capital inflows, rather than marketing and “being first”, are surely the ultimate judge of success.

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Australia Banking Crypto News ETFs Regulation

Australian Regulator Lays Out Crypto Industry Regulatory Roadmap

The Australian Prudential Regulation Authority (APRA) this week revealed its preliminary risk management expectations for regulated entities dealing with crypto assets, along with a policy roadmap for the next three years.

The roadmap outlines plans to introduce operational risk standards by 2024 and, tentatively, crypto asset requirements and stored value facility standards by 2025. APRA also announced that it would be looking at “possible approaches to the prudential regulation of payment stablecoins, among others”.

Need For Due Diligence and Risk Assessments

APRA, which supervises Australian banking, insurance and superannuation institutions, stressed the need for due diligence and risk assessments in a letter from chairman Wayne Byres.

APRA chairman Wayne Byres. Source: theislanderonline.com.au

In the letter, APRA specifies that regulated entities:

  • consider the principles and requirements of prudential standards when relying on a third party in conducting activities involving crypto assets; and
  • apply clear accountabilities and relevant reporting to the board on the key risks associated with new ventures.

Financial Watchdog Also Bares Its Teeth

Along with APRA’s prescription, the Australian Transaction Reports and Analysis Centre (AUSTRAC) – the country’s financial watchdog – released its own set of guidelines on preventing the criminal abuse of digital currencies. 

This follows a statement released late last year by AUSTRAC in which it directed Australian banks to adopt better systems to deal with assessing risk rather than simply debanking customers. â€śBusinesses vulnerable to exploitation should not automatically have their accounts closed simply to avoid managing risk,” AUSTRAC said at the time.

And in July 2021, the Australian Securities and Investments Commission (ASIC) set out a range of proposals relating to the inclusion of cryptos in exchange-traded products (ETPs), seeking market participants’ input to shape its position within the regulatory landscape.

This week also saw ETF issuer 21Shares announce Australia’s first spot exchange-traded funds.

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Australia Bitcoin Crypto News ETFs Ethereum

Australian Crypto ETF Competition Heats Up, Two More Listings Set to Launch

Within days of news that Australians will soon receive the country’s first Bitcoin exchange traded fund (ETF), a slew of competitors look set to follow suit by launching their own own crypto ETFs.

Another Bitcoin ETF and the First Australian Ethereum ETF

According to a press release, 21Shares AG (“21Shares”), a Swiss-based issuer of crypto exchange traded products (ETPs), and Australian ETF provider ETF Securities have jointly launched two funds to provide direct access to bitcoin and ethereum respectively:

  1. 21Shares Bitcoin ETF (EBTC)
  2. 21Shares Ethereum ETF (EETH)

Both EBTC and EETH are due to list on April 27 on Australia’s secondary public exchange, the Cboe (formerly Chi-X), with EBTC tracking the price of bitcoin and EETH tracking the price of ethereum, both in Australian dollars. Much like Cosmos Asset Management bitcoin ETF (CBTC), whose bitcoin will be held by Gemini, both of 21 Shares’ funds have opted for an offshore custodian in the form of Coinbase, who will hold the assets in cold storage.

While 21 Shares claims that both of its products are a first in Australia, sticklers for detail may wish to point out that EBTC is in fact tied for first with CBTC, as both are scheduled to go live April 27.

In describing the commercial basis for its imminent listings, ETF Securities Australia executive chairman, Graham Tuckwell, said:

The products give investors a way of trading cryptocurrency in a tightly regulated environment, without the need to establish and maintain their own bitcoin or ethereum wallets, or manage the risks.

Graham Tuckwell, executive chairman, ETF Securities Australia

Biggest Capital Market Gets Left Behind

Shortly after news that Australia was going full steam ahead with crypto ETFs, a representative of global ETF provider VanEck described the US regulator’s conservative stance on listing a bitcoin ETF as “a big loss for investors”. And at present, there doesn’t appear to be an end in sight.

Last year, Crypto News Australia reported that there were more than 34 applications outstanding in the US, with “market manipulation” being one of the more frequently cited concerns.

It goes without saying that there are plenty of variables potentially holding up ETFs in the US – whether financial, political, or otherwise driven by “investor protection”. Whatever the case may be, it’s evident that as Australia becomes the eighth nation to launch a bitcoin and ethereum ETF, the world’s most developed capital market is getting left behind:

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Australia Bitcoin Crypto News ETFs

Australia’s First Bitcoin ETF Gets Green Light for Imminent Launch

According to a report by the Australian Financial Review, the long-awaited Australian bitcoin exchange traded fund (ETF) has been given the go-ahead by regulators and may be open for trading within a week on the Cboe equities trading venue:

Bitcoin ETF Approved … Finally

As reported by Crypto News Australia last week, one of the major obstacles holding up approval of a local spot-based bitcoin ETF was the high margin requirements required of ETF providers – 42 percent against each trade.

ASX Clear, Australia’s equity clearing house, has now revealed that of the 35 applicants, only four were willing to stump up the tough margin requirements needed to cover the settlement risks of a bitcoin ETF.

We are now at our minimum number of clearing participants and that means we are good to go.

Hamish Treleaven, ASX chief risk officer

ASX chief risk officer Hamish Treleaven is expected to issue a notice today giving brokers, clearers, market makers and investors sufficient time to digest the news. Estimates vary, but some speculate that over A$1 billion could flow into Australia’s first bitcoin ETF – the Cosmos Asset Management bitcoin ETF (CBTC) – which may begin trading as soon as April 27.

Just the Beginning

Rather than having local bitcoin custodial services, CBTC has opted for the Winklevoss-powered exchange, Gemini:

Furthermore, as one half of the Winklevoss twins notes, the product is essentially a “fund of funds” as it invests in Canada’s Purpose Bitcoin ETF:

Expect the Floodgates to Open

Risk-averse regulators have treaded cautiously to date as they wade into uncharted territory, perhaps explaining why it has taken upwards of two years for a bitcoin ETF to be approved. Now that the mould has been broken, expect a slew of competitors to follow suit, each with its own custody and fee structure.

Although unconfirmed, it’s been reported that other fund managers are already working on a bitcoin ETF, including ETF Securities, VanEck Australia, BetaShares and Monochrome Asset Management.

While individuals in search of financial self-sovereignty may scoff at the notion of a bitcoin ETF – not your keys, not your coins – for many institutional investors, it is precisely the investor product (and green light) they were looking for:

The approval of the CBTC is a vote of confidence in the asset. Investment professionals wanting exposure will likely view the approval as reducing their career risk.

CBTC opens the door to Australian asset managers and superannuation funds that have sat on the sidelines pending a local regulatory stamp of approval. Now they’ve got it, it will be fascinating to see whether the uptake is as strong as predicted.

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Australia Bitcoin ETFs Investing Regulation

Australian Crypto ETF Stalled by High Collateral Requirements

The creation of Australian-based spot Bitcoin ETFs is being hampered by what some fund managers regard as excessively high collateral requirements being imposed by traditional clearing houses. 

High collateral obligations mean many clearing participants are reluctant to agree to trade Bitcoin ETFs, with only three out of 35 acceding to the requirements. The ASX’s internal, independent clearing house, ASX Clear, requires at least four to get involved before Bitcoin ETFs can be made available to investors.

Spot Bitcoin ETFs are backed by actual Bitcoin, as opposed to Bitcoin Futures ETFs which are backed by Bitcoin Futures contracts. Generally, crypto futures ETFs have faced lower regulatory hurdles and are therefore currently more common, but spot ETFs have several advantages that make them more attractive to many investors.

High Collateral Costs Intended to Offset Risk

ASX Clear sets collateral requirements for different investment products based on risk. Following an assessment of the risks and volatility of Bitcoin, ASX Clear decided that a Bitcoin ETF would require a 42 percent margin to be lodged against each trade, which is very high compared to other investment products.

To get a sense of just how high these collateral requirements are, the BetaShares Crypto Innovators ETF, which invests not in cryptocurrencies but in 34 companies involved in the digital asset industry, faces collateral requirements of under 15 percent.

Speaking to the Australian Financial Review, the ASX’s chief risk officer Hamish Treleaven explained the high requirements:

In all of our decision-making on this we have remained focused on appropriate risk management for the clearing house – that’s our regulatory obligation.

Hamish Treleaven, chief risk officer, Australian Securities Exchange

Lucrative Prize Awaits First Bitcoin ETF

There are currently several fund managers racing to launch the first Australian Bitcoin ETF, including Betashares, Cosmos Assets Management, ETF Securities, Monochrome Asset Management and VanEck Australia. 

ETF Securities announced its planned launch of Australia’s first spot Bitcoin ETF last year, but like those of all such products, this has been delayed due to regulatory issues.

Many in the industry believe the first fund to launch could attract over A$1 billion of capital, with some predicting over A$100 million could pour in on launch day alone – more than double the funds BetaShares Crypto Innovators ETF attracted on its first day of trade last November.