Regulatory green light for bitcoin ETF fuels local hype

Approval from overseas regulators looks to turn the possibility of crypto ETFs in Australia into a reality.

After the US Securities Exchange Commission gave ProShares’ futures-based bitcoin ETF the green light, Australia’s crypto sector is more optimistic about local developments.

Kraken managing director for Australia Jonathan Miller said that the impending launch of a bitcoin ETF can be seen as a measurement for where the crypto asset is in its broader journey towards mainstream adoption. 

“We must remember that bitcoin is one of the most effective cross-border payment technologies we have ever seen, [and] an ETF will provide a pathway for entities to get exposure to bitcoin via traditional regulated instruments,” he said.

Looking forward, Mr Miller predicted more conservative and restricted institutions to add bitcoin exposure to their portfolios.

That said, he noted a clear caveat in that ProShares ETF will hold bitcoin futures contracts rather than spot bitcoin.

“While this is a really positive thing for the maturation of the industry, it isn’t necessarily a watershed moment for accessibility and each layer of abstraction away from the underlying asset can add risk and cost,” he said.

Locally, Mr Miller expressed interest in seeing how Australian regulators react to the news and whether it accelerates the arrival of bitcoin-based ETFs into Australia’s financial system.

“It’s going to be interesting to see how the flow-on effects of a bitcoin futures ETF in the US impacts the market and local regulatory developments over the next few months as we lead into Crypto Christmas,” he said.

Mr Miller’s comments come following BetaShares’ announcement that it would look to list its first ETF offering with crypto exposure on the ASX in the near future.

“The crypto economy is highly dynamic and growing rapidly, and is built using exciting and disruptive technology,” BetaShares CEO Alex Vynokur said.

Expected to begin trading on the ASX in the coming weeks under the ticker code “CRYP”, the BetaShares Crypto Innovators ETF will aim to track the Bitwise Crypto Industry Innovators Index.

Mr Vynokur said that CRYP will be an innovative way for investors to get exposure to the crypto sector “in a familiar, liquid and cost-effective ETF structure”.

These developments come mere weeks after Australian Securities and Investments Commission chair Joseph Longo expressed concern about the lack of regulation and legislation surrounding crypto-based assets.

ASIC has previously acknowledged the demand for domestic crypto ETPs, but it argued there was a “real risk of harm to consumers and markets if these products are not developed and operated properly”.

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Zac Zacharia (Managing Director) has been assisting clients to create wealth and secure their futures for over 14 years.

He is also an accomplished presenter and educator

Co-authoring the popular investment book, Property vs Shares.