As the U.S. opens its doors for cryptocurrency exchange traded funds (ETFs), Australia is also moving forward with its own crypto agendas with the approval of spot price ETFs for bitcoin and ether.
The Australian Securities and Investments Commission (ASIC) also instituted guidelines and requirements for how issuers should offer crypto-based fund products. One of those requirements involves security, which has been a major point of conflict by regulatory watchdogs with regard to approving cryptocurrency-based ETFs.
ASIC noted that private keys must remain offline via cold storage as opposed to being held in a public storage option, such as an exchange. To add an extra layer of security, issuers must maintain private key backups across various geographic locations.
“The approval will allow Australian investors to gain direct exposure to the physical assets’ price through funds that trade on the Australian Securities Exchange (ASX),” an Investopedia article noted. “It also cements Australia’s intent toward digital innovation and opens the door for regulators in other jurisdictions to fast-track spot crypto ETFs as the asset class continues to gain momentum with investors.”
The approval by the ASIC comes less than a month after the ProShares Bitcoin Strategy ETF (BITO) started trading on the New York Stock Exchange after getting blessed by the U.S. Securities and Exchange Commission (SEC). Bitcoin purists may be lukewarm to the idea of a futures ETF, but spot price ETFs can bring more accuracy in terms of pricing.
“We recognize the interest in, and demand for, exchange-traded products (ETPs) and other investment products that hold crypto-assets in Australia. However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly,” ASIC said in a statement.
As the U.S. awaits an ether-focused ETF next, it could open up the floodgates for more interest in alternative coins. With the approval from ASIC for bitcoin and ether, it’s only a matter of time before alt coin ETF products make their way into the Australian capital markets.
“This will represent a huge move forward as investors will finally be able to access Bitcoin through a cost-effective, liquid investment vehicle. As other digital assets mature, we expect the scope to broaden,” Asia-Pacific chief executive at VanEck Arian Neiron said in The Australian Financial Review.
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