Multiple physical ETFs based on bitcoin and ether will launch in Australia this month. That spells good news for the global crypto market as it makes it easier for institutional investors to invest in crypto products.
These are the following products:
- 21Shares launches a bitcoin spot ETF and an ethereum spot ETF
- Cosmos Asset Management launches a bitcoin futures ETF
Why is this important to the market?
ETF stands for Exchange Traded Fund, this product is a type of fund whose shares can be traded on regular stock exchanges. These types of funds usually consist of stocks from a certain sector, such as ETFs filled with shares of technology companies or medical companies. ETFs are also used to take positions in commodities such as gold or oil.
In the US, the world’s largest market, regulators have given the green light to futures-based crypto ETF products, but have not approved any physical products for trading. Therefore, the money of US investors is not used to buy real cryptocurrencies to fill the funds, but to buy short or long contracts.
ETFs launched in Australia are called spot, because the underlying product (in this case, bitcoin and ether) is bought in the regular market. Investments in these spot ETFs therefore directly affect the prices of the underlying crypto.
Meets the requirements
According to the Australian Financial Review, ASX Clear, the country’s leading clearinghouse, said that four ETF issuers have agreed to cover margin requirements to offer new crypto-related products on the Cboe Australia exchange.
It is believed that there are currently three institutional grade clearing participants and one major retail clearing participant willing to pay the required 42% margin.
A clearinghouse ensures the secure settlement of transactions between two other parties. This can refer to payment transactions, but also to transactions in financial instruments. The main purpose of clearing is to reduce liquidation risk, hence the required margin of 42%.
ASX Chief Risk Officer Hamish Treleaven said:
“We are now at our minimum number of participants in compensation and that means we are ready.”
Treleaven will send a message to market participants today informing them that ASX Clear has received regulatory approval. Brokers, clearers, market makers and investors have seven days to prepare for the launch of the new products.
First on April 27
This means that the first product can be released on April 27. Cosmos Asset Management gets the scoop, but unfortunately its ETF is contract-based. The document says that this product can expect an inflow of 1 billion Australian dollars.
21 Stock Cash ETF
21Shares, which already offers a number of exchange-traded crypto products in Europe, wrote in a press release today that it will launch a physically-backed bitcoin and ether exchange-traded fund in Australia. This is a Swiss company and is working with ETF Securities to launch the two funds. ETFs track the price of bitcoin and ether in Australian dollars.
“Australian investors clearly want and deserve an affordable, convenient and professional way to access the growing crypto asset class and we are excited to continue building accessible bridges to the crypto world,” said Hany Rashwan.
Rashwan is the CEO of 21Shares and says that if it is successful, more ETFs will be launched: “We started with Bitcoin and Ethereum, but we have even more exciting plans for Australian investors.”
They already have experience with this, because 21Shares already offers ETPs (exchange traded products) on several other markets. This one tracks a wide variety of assets, including Tezos and Solana.