Published On: January 11th, 2024
In a move that could greatly simplify cryptocurrency investments for average Australians, the Australian Securities Exchange (ASX) is gearing up to green-light a Bitcoin ETF in Australia within this year’s first half. This comes soon after the U.S. regulators’ nod to the first Bitcoin Spot ETF Australia.
Retail investors could soon enjoy a more streamlined and formal approach to adding Bitcoin to their investment portfolios.
The Approval Process and SEC’s Stance
While the Bitcoin ETF approval is good news, it comes with some reservations from the SEC chair, Gary Gensler.
He acknowledged that a recent court ruling limited the SEC’s power to deny such ETF approvals. The commission had previously disapproved over 20 exchange rule filings for spot Bitcoin exchange-traded products (ETPs), including one by Grayscale for converting their Bitcoin Trust into an ETP.
However, the U.S. Court of Appeals for the District of Columbia found that the commission had not provided sufficient reasoning for disapproving Grayscale’s proposal.
As a result, the court vacated the previous decision and sent the matter back to the commission.
Considering this, Gensler believes that approving the listing and trading of spot Bitcoin ETP shares is the most viable path forward.
Bitcoin Spot ETF Australia: A New Era with Cautious Optimism
Although the ASX has traditionally been stringent on cryptocurrency, recent developments indicate a softening stance. Revised “exchange-traded product” rules have been implemented, setting out apparent custody and liquidity requirements for crypto ETFs.
Nonetheless, the additional costs and risks associated with such margins meant that earlier listed ETFs on the alternative market, Cboe, saw dull performance and volume, with one of the local players, Cosmos Asset Management, delisting their product.
Implications of the Bitcoin ETF Approval for Brokers and Investors
This global shift presents a pivotal moment for local brokers, such as CommSec, to decide whether to offer U.S.-listed Bitcoin ETFs to Australian investors via online platforms.
As cryptocurrency inches toward being recognised as a mainstream asset, financial advisers might increasingly recommend it to clients. Industry experts predict this could lead to a significant upsurge in Bitcoin’s value, spurred by heightened demand.
Pathway to Widespread Adoption
Further, investment advisers and institutions, including retirement funds, might find embracing digital currencies a strategically sound and convenient investment avenue.
Henrik Andersson of Apollo Crypto highlights the “game-changing” nature of the U.S. listings, suggesting profound effects on asset managers and the Australian populace’s perception of cryptocurrencies.
A Future of Digital Currency Investment Awaits
The preparatory steps by ASX and the international trends in crypto ETFs’ acceptance herald a new future for digital currency investments.
Once hesitant due to the complexities and volatilities of the crypto market, retail investors could find themselves confidently navigating this novel asset class with the established framework only an ETF can provide.
As regulatory details are ironed out and more ETFs enter the marketplace, the fusion of traditional finance and digital currency seems inevitable, promising a transformative impact on the investment scenario in Australia.
A Glance at the Challenges in Setting Up Bitcoin ETFs in Australia
When VanEck attempted to introduce a Bitcoin Exchange-Traded Fund (ETF) in Australia in 2022, they had to deal with strict regulations imposed by the Australian Securities Exchange (ASX) listing rules.
These regulations brought about significant challenges for industry professionals, including stockbrokers, to participate. This, in turn, impacted the uptake of the Bitcoin ETF.
Additionally, there needs to be more qualified personnel or entities able to provide adequate security for Bitcoin holdings.
The past challenges strongly indicate that it is difficult to set up a Bitcoin ETF in Australia in a way that works well and is very secure.
The Future of Bitcoin Value
Bitcoin’s Value Could Skyrocket: Experts like Henrik Andersson from Apollo Crypto believe that Bitcoin ETFs could make Bitcoin’s value reach new highs. With Bitcoin ETFs in Australia, it’s easier for financial advisors to suggest investing in Bitcoin to their clients.
If even 1% of the money from the U.S. ETF market goes into Bitcoin ETFs, about $97 billion could be invested in them. This could make Bitcoin’s price soar, potentially going over $200,000, changing the cryptocurrency world and making Bitcoin a commonly accepted investment.
