Category: Investing

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Australia Bitcoin Independent Reserve Investing Surveys

Bitcoin Dominates Brand Awareness as Voted by Aussies

Bitcoin (BTC) is far and away the most well known cryptocurrency, with over 90 percent of Australians having heard of the OG crypto, according to a 2022 survey by Australian cryptocurrency exchange Independent Reserve.

The Independent Reserve Cryptocurrency Index (IRCI) is an annual cross-sectional survey of the attitudes of 2,000 Australians towards cryptocurrency and is designed to reflect the age, gender and demographics of the broader Australian population.

Aussies Consider Bitcoin an Investment

This year’s IRCI found that more Aussies than ever before consider Bitcoin an investment asset, at just under 30 percent. This rise coincides with a downward trend since 2019 in the number of people who consider Bitcoin a form of money, a scam, or had simply not thought about it enough to answer.

The survey also found that plenty of Aussies knew about crypto other than Bitcoin, with 42.9 percent having heard of Ethereum, 35.8 percent aware of Dogecoin, and 15.1 percent familiar with XRP.

Bitcoin and Ethereum are the most well-known cryptocurrencies in Australia. Image source: Independent Reserve

Short-Term Sentiment Falls

While awareness of crypto is high, sentiment has fallen compared to last year’s survey, with Independent Reserve’s overall index dropping from 54 to 45. According to Independent Reserve, a score of 100 would “indicate complete awareness, optimism, trust and adoption” while 0 would indicate the opposite.

Independent Reserve said a more negative sentiment in 2022 reflected lower crypto ownership rates and a fall in short term confidence in crypto. Despite this drop in sentiment since 2021, overall ownership rates remain up in 2020. 

The steepest drop in crypto ownership occurred in the 18-24 age group where it dropped from 56 percent in 2021 to just 33.3 percent this year. In other age groups, ownership rates actually held steady or grew.

Long Confidence Remains Strong

Despite the drop in short-term sentiment, the survey found Aussie’s longer term confidence in crypto remains strong:

  • Only eight percent of respondents said they plan to get out of crypto entirely;
  • 44 percent said they plan to increase or diversify their crypto holdings;
  • 45 percent said they would hold.

When asked what they thought Bitcoin’s price would be in 2030, the most popular response from both crypto owners and non-owners was between $30,000 and $100,000, indicating many believe Bitcoin’s value will grow considerably from where it sits today.

The prospect of crypto eventually being widely accepted by people and businesses was highly correlated with age, with all age groups under 44 strongly believing it was likely. People aged between 45 and 54 years old were fairly evenly split between likely and unlikely, while those over 54 considered it unlikely.

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Australia Cryptocurrency Tax Investing Regulation

Australia 2022 Budget Continues Capital Gains Tax on Crypto Assets

Capital gains tax will continue to apply to Aussie’s crypto investments, as confirmed by an explicit mention of digital currencies in the federal budget released on Tuesday October 25.

The budget papers 2022-23 state that legislation will be introduced to clarify that crypto won’t be treated as foreign currency for tax purposes. The incoming legislation will be backdated to income years that include 1 July 2021.

It confirms the continuation of current practices whereby investors must track, calculate and declare any capital gain or loss made on digital assets in their tax returns.

However, the budget specified the rules are different for government-issued digital currencies: “The exclusion does not apply to digital currencies issued by, or under the authority of, a government agency, which continue to be taxed as foreign currency.” 

Certainty for Investors, No Impact on Coffers

Although the mention of digital currency taxation is just one small section in a document of more than 200 pages — with no expected impact on government coffers — calling out crypto in the budget signifies the rising relevance of digital assets in financial markets. 

It reinforces a statement issued in June, not long after the Albanese Government took power, that said cryptocurrencies held as investments would be excluded from foreign currency tax arrangements — to reduce uncertainty in the wake of a decision by El Salvador to allow Bitcoin as legal tender.

In that earlier statement, Assistant Treasurer Stephen Jones said maintaining a capital gains tax approach to crypto investments, “…gives certainty and clarity at a time of volatility for crypto currencies.”

“The Government will continue to take a pragmatic and timely approach to its role in the rapidly-evolving digital currency landscape.”

Assistant Treasurer Stephen Jones

Understanding Your Crypto Tax Obligations

Most Australians who treat crypto as a personal investment, with the hope of making long-term gains, are considered investors and therefore subject to capital gains tax on the gains or losses they make on their digital assets. 

It’s important for investors to be able to assess all of their trades throughout the year so they can stay on the right side of the tax collector. Fortunately, there are some great free guides and calculators to help you manage your tax return. 

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Crypto News Hong Kong Investing Regulation

Hong Kong Looks to Legalize Retail Crypto Investing

The Hong Kong government has introduced a bill to allow retail investors to directly invest in digital assets, marking a stark departure from mainland China’s blanket ban on crypto. 

The move was confirmed in a speech by Hong Kong’s Secretary for Financial Services and the Treasury (SFST), Christopher Hui, at the SFST’s Executive Roundtable on October 21.

Hong Kong Looks to Embrace Web3

Hui’s confirmation follows comments reported earlier in the week from the head of Hong Kong’s Securities and Futures Commission (SFC), Elizabeth Wong, who said the Special Administrative Region was looking to introduce a bill which would allow retail investors to “directly invest into virtual assets.” 

Wong’s comments came during a panel discussion held by InvestHK on October 17, during which she highlighted how important the ‘one country, two systems’ approach to the regulation of Hong Kong’s financial sector had been in the past, saying it “forms the basic foundation to Hong Kong financial markets.”

Wong added that the SFC was also actively considering tabling a bill allowing retail investors to invest directly into digital assets.

Hui’s speech has since confirmed the introduction of this bill, with the Secretary stating:

“On virtual assets, we have introduced a bill to propose establishing a regulatory regime for virtual asset service providers.”

Secretary for Financial Services and the Treasury (SFST), Christopher Hui

Hui spoke more broadly about fintech, revealing that the theme of this year’s Hong Kong Fintech Week, which runs from October 21 to November 4, will be “Pushing Boundaries, Reaping Benefits”, and will focus on emerging Web3 technologies such as metaverse. For the first time, the event will also issue NFTs, in what Hui describes as an effort to “test their ability to engage participants.”

In a further sign of Hong Kong’s enthusiasm for crypto, Hui said that during Hong Kong Fintech Week the government plans to issue a policy statement outlining their plans for the development of virtual assets which he says is intended to demonstrate to the global virtual assets community the government’s “…vision of developing Hong Kong into an international virtual assets centre.” 

Significant Change From Past Stance

This new proposed framework in Hong Kong differs considerably from the government’s previous approach to crypto. For the past four years the SFC has restricted crypto trading using centralised exchanges to professional investors, which means only individuals with portfolio’s valued at over US$1 million could invest in crypto using centralised exchanges.

According to Wong, over the past few years crypto markets have become more compliant and generally safer for average investors to participate in and should therefore be made accessible to all retail investors, explaining:

“We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.”

Head of Hong Kong’s Securities and Futures Commission (SFC), Elizabeth Wong

Hong Kong’s new approach follows the launch of a US$3.8 billion fund designed to attract business and investment back to the Special Administrative Region after something of an exodus following several years of political turbulence and strict COVID-19 lockdowns.

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Crypto News Investing Regulation South Africa

South Africa Classifies Crypto Assets as Financial Products

Bitcoin infront of South African Flag

In a milestone decision for crypto regulation, South Africa declared on October 19 that all crypto assets are, in fact, financial products. 

This declaration from South Africa’s Financial Sector Conduct Authority (FSCA), the nation’s financial services regulator, means that all crypto assets are now governed by the Financial Advisory and Intermediary Services Act, 2002 and will be subject to the same regulation as other financial products.

The declaration was signed by South Africa’s Commissioner of the FSCA, Unathi Kamlana, and came into effect immediately.

What Now Qualifies as a Crypto Asset in SA?

The declaration includes a definition of what qualifies as a crypto asset. The definition used is quite broad, defining a crypto asset as a ‘digital representation of value’ that meets the following three criteria:

  1. It’s not issued by a central bank but it is able to be traded, transferred or stored, allowing it to be used for payment, investment or other uses;
  2. It applies cryptographic techniques; 
  3. It uses distributed ledger technology (such as blockchain).

What Does it Means for Crypto Investors in South Africa?

For the first time, cryptocurrencies will be regulated in South Africa, which stands to bring significant benefits to investors and consumers — such as improved legal protections for victims of scams and improved anti-money laundering (AML) and know your customer (KYC) compliance. 

Regulation will also lead to more clarity around the legal status of cryptocurrencies that may encourage more commercial and enterprise use cases, such as real-world asset tokenisation and partnerships between traditional financial institutions and crypto-based businesses.

Despite the benefits of regulating crypto, there are fears that increased regulation and KYC requirements may lead to marginalised people losing access to crypto services on which they rely, with some suggesting people who earn under a certain threshold should be exempt from KYC requirements.

According to Finder’s Cryptocurrency Adoption Report, released in August 2022, 4.2 million South Africans own crypto, that’s 10 percent of the population, slightly lower than the global average of 15 percent.

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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
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Australia Crypto News Investing Regulation

ASIC Chair ‘Troubled’ by Extent of Risk Taken in Crypto Investing

The Australian Securities and Investments Commission (ASIC) has admitted it holds concerns over the crypto investment increase seen during the Covid-19 pandemic, particularly among new, inexperienced investors.

According to ASIC’s new investment behaviour research, conducted among more than 1000 investors in November 2021, crypto was the second most common investment product last year.

Almost Half of Investors Own Crypto

ASIC chairman Joe Longo pointed to the increasing number of new investors buying cryptocurrency without fully understanding the associated risks.

Of those surveyed, 44 percent of investors stated they owned crypto, and of these, 25 percent claimed crypto was their only investment:

https://www.finsia.com/news-hub/the-standard/joe-longo-will-make-access-affordable-financial-advice-one-his-priorities

According to the survey, only 20 percent of cryptocurrency owners considered their investment approach to be ‘risk-taking’, raising concerns that investors did not understand the risks of this asset class.

Joe Longo, ASIC chairman

Perhaps even more concerningly, 41 percent of investors surveyed stated they had received their investing information from social media platforms – predominantly Reddit, TikTok, Facebook, and YouTube.

Longo finds these figures troubling and believes consumers are failing to weigh the risks and fully understand what they are participating in. Andrew Bragg, a NSW Liberal Senator and vocal proponent of the crypto industry, agrees with Longo and recommends “sweeping reforms to regulate crypto”.

ASIC Pleads for Smart Investing

April 2022 was a notable month for ASIC warnings regarding cryptocurrency and other financial matters. Firstly, the regulator released a guidance note for Aussie ‘finfluencers’. The document outlined which financial influencers could be in breach of the law, and recommended these people check they had the right qualifications to be providing financial advice. The move was met with contention by many ‘finfluencers’ at the time.

Only days later, ASIC’s former chairman Greg Medcraft called for urgent Australian crypto regulatory clarity. Medcraft, joined by venture capitalist Mark Carnegie, requested that Aussie regulators join the crypto start-up race. According to the Australian Financial Review, Medcraft hoped to develop a plan to encourage digital asset tech and investment.

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Bitcoin Crypto News Ethereum Filecoin Investing

Australian Asset Manager ‘Holon’ Launches Multiple Low-Cost Crypto Funds

Following recently approved Australian crypto exchange-traded funds (ETFs), Sydney-based Holon Global Investments (Holon) has just launched three crypto funds of its own, partnering with Gemini as its custodian:

Low-Cost Alternative for Retail Investors

Holon, an asset manager which identifies itself as a Web3 investor, has launched three unlisted funds that provide access to bitcoin, ethereum and filecoin respectively.

According to the investment firm, the funds are currently the only managed investment schemes for digital assets available to retail investors that are registered with the Australian Securities and Investments Commission (ASIC).

We are huge believers in the potential for blockchain and cryptocurrency to revolutionise key areas of the global and Australian economy, including finance and data storage. But Australian investors, financial investors, and financial advisers have struggled to find regulated ways to invest.

Heath Behncke, managing director, Holon

The funds have a A$5,000 minimum investment, or A$2,000 with a A$200 per month savings plan. Furthermore, Holon has suggested that all three funds hold long positions only, as there is no gearing or trading.

Notably, the funds will incur a management fee of 0.4 percent, significantly less than the 1.25 percent fee charges by the initial group of approved Australian crypto ETFs.

Holon’s head of asset management highlighted the thought process behind this decision in a recent interview with the Australian Financial Review:

We don’t think we’re adding an enormous amount of value here, and so we shouldn’t be charging an enormous fee.

Rory Scott, head of asset management, Holon

Holon Strengthens Ties with Gemini

According to a statement by Gemini, it will act as custodian for all three funds, given its credentials and experience in operating within challenging regulatory environments. But this isn’t the first time Holon has teamed up with Gemini. Last year, it partnered with the Winklevoss-led outfit after launching its Filecoin wholesale fund.

Holon’s managing director Heath Behncke was excited about the launch, commenting:

The Holon funds have been carefully structured to include Gemini’s institutional grade custody to provide investors and financial advisors with attractive exposure to some of the most credible and exciting cryptocurrencies – Bitcoin, Ethereum and Filecoin.

Heath Behncke, managing director, Holon

It’s interesting to note that when Commonwealth Bank of Australia announced its foray into crypto, which has since been postponed, it too leaned on Gemini for custodial services. At present, it isn’t clear whether there is simply a lack of credible local institutional-grade custodians, or whether other factors, such as regulations, are at play.

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Ethereum Investing Markets

ETH Surges Close to 50% in a Week Amid Bullish Merge Announcement

The price of Ethereum (ETH) has surged almost 50 percent in the past week on the back of an announcement that the long-awaited Merge is tentatively scheduled to take place in September.

According to data from CoinGecko, at the time of writing ETH was trading at US$1,535.71, up 49.5 percent from its recent low of US$1,027.42 on July 13.

Merge Hype Primary Driver of ETH Price Growth

On July 14, Ethereum Foundation member Tim Beiko tweeted a soft timeline for the much-anticipated Ethereum Merge, suggesting it could take place on September 19: 

Despite Beiko’s caveats that this timeline was tentative and subject to change, the market reacted very enthusiastically to the news, with the price of ETH jumping almost 25 percent in the two days following the tweet.

What is the Merge?

The Merge refers to Ethereum’s transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism. This transition will mean the end of mining on the Ethereum network, with miners replaced by validators. Validators will need to stake a minimum of 32 ETH on the network and will then have the chance to be randomly selected to add the next block to the chain, in the process earning ETH.

The primary benefit of switching to PoS is enormously improved energy efficiency. Some estimates put the reduction in energy use at around 99.95 percent. However, the Merge in itself is not expected to result in lower gas fees or increased transaction speeds.

Bullish Indicators for ETH

Beyond the spike in its price, several other indicators also suggest sentiment towards ETH is turning positive. The number of whales – accounts holding between 1000 and 100,000 ETH – has grown by 131 since early May, while the number of accounts holding over 100 ETH hit a 15-month high of 45,081 on July 13:

Additionally, the total value locked in the Ethereum 2.0 deposit contract hit a one-month high of US$17,957,275,144.37 on July 18, just days after the announcement of the Merge timeline:

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Bitcoin Economics Investing Markets

Bitcoin Dips Below $19,000 Amid Highest US Inflation Print in 40 Years

Bitcoin briefly dipped below US$19,000 on July 13 following the announcement of a higher than expected Consumer Price Index figure in the US. 

Economists were tipping a June year-on-year inflation number of 8.8 percent, but the announced rate came in at 9.1 percent – the highest figure in over 40 years – leading to an immediate and sudden dip in BTC’s price.

Recovery Follows 4.5% Dip

According to data from CoinMarketCap, in the hour following the CPI announcement BTC’s price dropped more than 4.5 percent, from US$19,989 to US$18,999. The price has since recovered and at the time of writing BTC was changing hands at US$20,234.

Prior to the current crypto bear market and skyrocketing inflation in the broader economy, BTC had been widely considered an inflation hedge. In January, despite rising inflation, BTC appeared to find support at around US$43,000, but as inflation has continued to surge and the crypto market has hit significant turbulence, its price has tumbled.

Since January, BTC’s price has dropped by almost 60 percent leaving many questioning whether Bitcoin truly is an effective hedge against inflation:

Where To From Here?

The record high inflation numbers will likely see central banks around the world, including in the US, continue to hike rates in an attempt to restore price stability at the expense of short-term economic growth.

Speaking at a recent European Central Bank forum, US Federal Reserve chair Jerome Powell affirmed the importance of getting on top of rising inflation:

Is there a risk we would go too far? Certainly there’s a risk … The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.

Jerome Powell, chair, US Federal Reserve

Generally speaking, higher interest rates mean less money circulating in the economy resulting in downward pressure on consumer spending and inflation, which may also translate into less money in the pockets of crypto investors and further falls for crypto prices.

This picture is further complicated by the unique factors causing the current wave of inflation – the war in Ukraine and ongoing complications from the Covid pandemic – which aren’t easily addressed with interest rate rises, resulting in significant economic uncertainty in the medium term.

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Australia Investing Regulation Scams

Australians Lost Almost $100 Million in 2021 to Crypto Investment Scams

Aussies lost more than A$2 billion to scams in 2021, including losses of A$84 million due to scammers seeking payment with cryptocurrency, according to an Australian Competition and Consumer Commission (ACCC) report.

The ACCC’s annual report on scams published on July 4 found that investment scams increased by 135 percent in 2021 and caused the most financial harm, resulting in A$701 million lost by Australians. 

This spike was driven specifically by crypto investment scams, which led to Aussie investors reporting losses of A$99 million – 270 percent higher than the previous year. 

The report tallies losses based on consumer reports shared with Scamwatch, ReportCyber, and 12 financial institutions and government agencies.

Common Types of Crypto Scams Aussies Fall For

Some of the most common ways scammers exploited Aussies’ interest in crypto to steal their hard-earned money include:

  • fake investment and crypto trading platforms, which sometimes mimic legitimate, well-known websites;
  • sales of fake crypto wallets;
  • tricking people into revealing their seed phrase for an existing wallet; and
  • offers to “help” people get set up on a crypto platform by remotely accessing their computer. 

Scammers typically contacted victims by phone, or through social media and websites. Crypto investment scams affected all age groups but people aged 65 years and over lost the most money (A$26.5 million). 

Combating Crypto Scams Requires ‘Urgent Work’

In her foreword to the report, ACCC deputy chair Delia Rickard suggests urgent work is needed to combat crypto investment scams:

The popularity and hype of cryptocurrency has led to a surge in losses to investment scams with combined losses of $701 million. At the same time, it is also becoming the preferred method of payment across all types of scams.

Delia Rickard, deputy chair, ACCC

While bank transfers remained the most common way scammers requested payment from victims in 2021, requests for cryptocurrency increased dramatically – up 216 percent. Earlier this year, the ACCC revealed crypto had surpassed bank transfers as scammers’ preferred payment method. 

Rickard also expressed her hope that government efforts towards licensing digital currency exchanges and custody requirements for crypto assets would slow the growth of crypto scams. Consumer groups have also called for Australia’s new Labor government to protect crypto investors through more stringent regulation.