The five-year race to launch the first spot cryptocurrency exchange-traded funds in Asia-Pacific ended in a dead heat on Thursday.
Sydney-based ETF Securities’ spot bitcoin and ether ETFs, developed in partnership with Switzerland-based 21Shares, traded on the Cboe Australia Exchange this morning. Fellow Sydneysiders Cosmos Asset Management bitcoin feeder ETF also launched today on the same exchange.
The listings mark the latest stage in the globalization of exchange-traded products investing in “physical” cryptocurrency, previously only available in Canada, Brazil and a number of European countries. US regulators have only allowed futures-based crypto ETFs so far, while the UK hasn’t even done so.
The Australian launches mark the culmination of a five-year battle in which ETF Securities first approached regulators with the idea of launching a crypto ETF in 2017.
The long gestation period is ending as digital currencies fell out of favor, but the price of bitcoin fell below $30,000 for the first time since July this week, cementing a 50 percent drop from November highs.
Still, an optimistic Kanish Chugh, Head of Sales at ETF Securities, said: “Australian investor interest in cryptocurrencies has not waned over the past few months, although we have seen underperformance. And with Bitcoin’s recent sell-off, it could also present an opportunity for investors who have been looking for attractive entry points into this new asset class.”
ETFS and Cosmos are hoping to secure a “first-mover advantage” in the market, with New York-based VanEck expected to launch a competing product on Australia’s main exchange ASX and Canada’s 3iQ Digital Asset Management in the coming weeks debut another ETF on the Cboe Australia Exchange.
Both ETFS and Cosmos had planned to launch their funds two weeks ago, only for a last-minute issue to surface with what Hany Rashwan, Chief Executive of 21Shares, called a “downstream infrastructure provider” believed to be a is a prime broker or clearer. That should now be solved.
The products follow different approaches. The Cosmos Purpose Bitcoin Access ETF (CBTC) is a feeder fund that buys shares of the $1.1 billion Purpose Bitcoin ETF (BTCC), listed in Toronto in February 2020. The all-in fee is 1.25 percent.
In contrast, the ETFS 21Shares Bitcoin ETF (EBTC) and ETFS 21Shares Ethereum ETF (EETH) invest directly in the underlying securities. They have been set up in partnership with 21Shares – the world’s largest crypto ETP manager with more than 30 products and $2.5 billion in assets under management – which will provide research and operational support. The fees for both are 1.25 percent.
ETF Securities said the funds are a “major step in the proliferation of cryptocurrency ownership,” allowing investors to trade and own crypto in a “tightly regulated environment with government oversight.”
“Until now, Australians looking to buy bitcoin or ether have been forced onto unregulated crypto exchanges that come with weaker investor protections,” she added.
For his part, Rashwan saw the listing as an “early entry point into the wider APAC region,” given Australia’s role as an Asia-Pacific investment hub.
Rashwan, who launched the world’s first crypto ETP in Zurich in 2019, added that 21Shares “is eyeing several dozen countries around the world” to launch more such vehicles. “We’re expanding beyond Europe,” he said.
Established North American crypto executives are also keen to gain a foothold in the Australian — and broader Asian — market, even if they are outnumbered in time.
The proposed offerings of 3iQ, which claims to be Canada’s largest digital asset manager at $2 billion, will also be feeder funds.
Also set to list on Cboe Australia, the 3iQ CoinShares Bitcoin Feeder ETF and 3iQ CoinShares Ether Feeder ETF will buy shares in two existing ETFs listed on the Toronto Stock Exchange.
VanEck also has experience in this space, operating a bitcoin futures ETF and a spot bitcoin private fund in the US, as well as more than a dozen spot crypto exchange-traded notes in Europe, among a wide array of other offerings.
The proposed Australian ETF will invest directly in Bitcoin and will be listed on the ASX, which last week officially added digital assets to the list of eligible underlying assets for exchange-listed funds.
Arian Neiron, chief executive of VanEck Asia Pacific, said he was unimpressed that competitors were entering the market first.
“With something as commodified as bitcoin, it comes down to the quality of the product and the price. The ASX was our choice of exchange and we are confident that this is the right path,” he said.
Because Australians invest primarily through pension plans, Neiron said, “they are conservative. They want a strong brand and a strong balance sheet that is global and global [a fund] that’s on the motherboard of the ASX.”
Source: Crypto News Austria