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The Australian financial sector is poised for a transformative change as it prepares to embrace a new wave of Bitcoin exchange-traded funds (ETFs). This news came following successful precedents in the United States (US) and soon-to-be in Hong Kong.
With heavyweight issuers leading the charge, industry experts are eyeing a significant shift in cryptocurrency investment patterns on the continent.
Australia’s Pension Sector Could Fuel Demand for New Bitcoin ETFs
ASX Ltd., Australia’s primary securities exchange, handles the lion’s share of equity trading. The latest report said it is considering approving its first spot Bitcoin ETFs. Sources close to the matter suggest that these approvals could materialize before the end of 2024.
In Sydney, BetaShares is actively working towards launching its product on the ASX. A company spokesperson shared in a recent interview that they have already reserved ticker symbols for their spot Bitcoin and Ethereum ETFs. Similarly, DigitalX Ltd., another Australian firm, disclosed in its half-year results that it has submitted an application.
Read more: Crypto ETN vs. Crypto ETF: What Is the Difference?
At the same time, VanEck, a veteran in the ETF sphere with products in the US and Europe, reentered the Australian fray. The company submitted a renewed application earlier this year.
The resurgence of interest in crypto ETFs is about more than just riding the wave of current market trends. Australia’s robust $2.3 trillion pension sector could be pivotal in sustaining inflows into these new financial instruments. Bloomberg reports that approximately a quarter of the nation’s retirement assets are held in self-managed superannuation funds.
These funds offer investors the flexibility to diversify into cryptocurrencies.
Jamie Hannah, Deputy Head of Investments and Capital Markets at VanEck Australia noted these self-directed funds’ potential to boost the proposed ETFs’ adoption and success.
“With self-managed super funds, brokers, financial advisers and platform money, there is a large enough addressable market here to get this ETF to an adequate size,” Hannah said.
However, the path to ETF prominence in Australia has its challenges. Previous attempts to launch spot Bitcoin ETFs in the region had mixed results.
For instance, Cosmos Asset Management introduced its spot Bitcoin ETF in 2022 on the CBOE Australia. But it was short-lived and subsequently delisted due to tepid investor interest. Nevertheless, the Global X 21Shares Bitcoin ETF, launched in the same period, continues to manage assets worth approximately $62 million.
This move could mark a critical milestone, mirroring the enthusiasm in the US. Since its first trading day, US Bitcoin ETFs have accumulated an impressive $53 billion in assets.
According to SoSo Value data, Bitcoin spot ETF recorded negative total net flows for three consecutive days last week. iShares Bitcoin Trust (IBIT), BlackRock’s spot Bitcoin ETFs, one of the top-performing ETFs, have received zero inflows since April 24, 2024.
This growing interest is open to more than traditional financial hubs. Hong Kong is also setting the stage for funds investing directly in Bitcoin and Ethereum, with trading expected to commence this Tuesday.
The international financial community closely monitors Australia as it prepares to launch spot Bitcoin ETFs. The outcome of these launches could indicate whether cryptocurrency is a viable investment asset for mainstream investors.