As of 7 April 2022, there are no crypto-based ETFs listed on the Australian bourse. Although, there is an ETF – BetaShares Crypto Innovators ETF, which aims to invest in companies that are at the forefront of the dynamic crypto economy, there is no Crypto pure-play ETF yet on the ASX.
This might soon become a thing of the past as a few ETF providers are lining up for regulator approvals for their new offerings. These ETFs would provide investors with direct exposure to cryptocurrencies.
Investing in ETFs is just like investing in a company, in the sense that investors can hold units of ETFs in their Demat accounts. This removes complications that come with directly investing in cryptos. One such is the obligation to keep on buying or selling cryptocurrencies such as Bitcoin in the futures market because of the expiry of contracts. This makes it impossible to hold them for a long time and investors have to roll over their contracts after every expiry to keep holding them.
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This is not the case with either the physical holding of these currencies or holding ETFs based on them. However, one advantage ETFs offer is the added layer of institutional-grade security, which an individual investor might not get. Also, the ETFs that hold crypto futures as an underlying asset theoretically can’t be stolen, because there is no physical possession by the ETF provider.
Lower costs of holding these funds also add to the attractiveness of these ETFs. Let us have a brief look at three such ETFs.
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BetaShares Bitcoin ETF & Ethereum ETF – BetaShares would soon be coming out with two ETFs targeted towards crypto enthusiasts. The BetaShares Bitcoin ETF and the BetaShares Ethereum ETF would be listed as 1BTC and 1ETF, respectively.
This would be a convenient, cost-effective way to give exposure to Bitcoin and Ether, without complications of investing in cryptocurrency directly. The fund would offer direct access to these two largest cryptocurrencies and investors can keep holding them just like shares of a company for as long as they want.
VanEck – Another ETF provider, VanEck, is looking to offer spot-based Bitcoin ETFs to investors who would be able to access Bitcoin in the form of an ETF. Although not many details have been disclosed, one thing Alex Vynokur, the Chief Executive of VanEck, has made clear is that the ETF would be highly liquid and cost effective.
ETF Securities’ might also make a quick move to introduce its first Bitcoin ETF offering for the Australian market.
Bottom Line
Investing in cryptocurrencies is highly risky and requires a different skillset altogether. Also, investing in cryptos via ETFs makes it easier but not any less risky. Therefore, while investing in these tokens, proper due diligence is recommended.
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