Australia’s main securities exchange, the Australian Securities Exchange (ASX), is reportedly on the brink of approving several spot Bitcoin exchange-traded funds (ETFs) by the end of the year. This move is seen as a significant step for the Australian market, which has been keenly observing the global acceptance and success of similar financial products.
Background
The potential approval is inspired by the successful launch and operation of Bitcoin ETFs in the United States and Hong Kong, which have collectively amassed about $53 billion in assets under management across various funds. These international examples have bolstered confidence among Australian fund issuers about the viability and demand for digital asset products.
VanEck Australia and BetaShares, a local ETF-focused fund manager, are among the frontrunners whose applications for Bitcoin ETFs are expected to receive a green light from ASX by year’s end. These developments were revealed by anonymous sources familiar with the internal processes.
Market Dynamics and Demand
Jeff Yew, CEO of Monochrome, a crypto asset management firm with a pending ETF application at a competing exchange, highlighted Australia’s robust crypto engagement. Yew anticipates that Australian Bitcoin ETFs could see between $3 billion to $4 billion in net inflows over the first three years post-launch. The primary demand is projected to come from fund managers and self-managed super fund (SMSF) investors, alongside significant interest from retail investors.
Yew also touched upon the risks associated with SMSF investors holding direct Bitcoin exposure on cryptocurrency exchanges, describing it as a potential “ticking time bomb” in the event of exchange failures. He cited statistics from the Australian Taxation Office indicating over $1 billion in crypto assets held on exchanges, predominantly by SMSF investors. In contrast, Bitcoin ETFs offer these investors a safer and regulated avenue to invest in digital assets.
Regulatory and Exchange Challenges
Monochrome initially filed for a spot Bitcoin ETF with ASX but later shifted its application to Cboe Australia due to prolonged approval delays and perceived regulatory challenges at ASX. Cboe Australia, being smaller, promised a more expedient and transparent listing process. Yew expressed optimism about Cboe approving Monochrome’s application in the coming weeks, reflecting a strategic pivot to where the firm perceives a more favorable regulatory environment.
The potential approval of Bitcoin ETFs by ASX represents a critical evolution in Australia’s financial product offerings, aligning with global trends and addressing the growing investor demand for secure and regulated crypto investment vehicles. This development could significantly impact Australia’s position in the global financial landscape, especially concerning digital assets.
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