Cryptocurrency enthusiasts and exchange-traded fund (ETF) lovers might have something in common today – mutual disappointment. That’s because the Australian Securities and Investments Commission (ASIC) delivered some bad news for anyone hoping to access Bitcoin (CRYPTO: BTC), or any other cryptocurrency for that matter, through an ETF.
ETFs have long been used to access investments that normally wouldn’t trade on a share market. Units of the ETFS Physical Gold ETF (ASX: GOLD), for example, represent ownership of physical gold bullion. The BetaShares Crude Oil Index ETF (ASX: OOO) represents exposure to crude oil futures contracts.
But up until now, cryptocurrencies like Bitcoin have not been available via the share market. Sure, would-be crypto investors can use specialised cryptocurrency exchanges to buy whole or fractional coins. But not on the share market. And this situation looks like it will continue for some time. According to a media release today, ASIC has comprehensively poured cold water on the notion of an ASX Bitcoin ETF.
A Bitcoin ETF on the ASX?
The corporate regulator stated that the prospect of a Bitcoin exchange-traded fund would create a “real risk of harm to consumers and markets if these products are not developed and operated properly”.
Although ASIC noted that the potential of cryptocurrency-based ETFs is attracting “significant attention globally”. ASIC also said it is aware of “interest in, and demand for, domestic crypto-asset ETPs”. It stated the following:
ASIC considers that crypto-asset ETPs have novel and unique features that require consideration of whether such products can support fair, orderly and transparent markets and comply with our regulatory framework.
So that looks like a hard no, at least for now. In saying that, ASIC did add a caveat:
The way in which crypto-assets themselves are classified and regulated in Australia is a matter for Government. ASIC notes the Senate Select Committee on Australia as a Technology and Financial Centre is considering this issue, and the proposals in this paper do not seek to pre-determine any decision the Committee may make.
Earlier this week, we actually discussed the possible emergence of a Bitcoin ETF over in the United States. Cathie Wood’s ARK Invest (a US ETF provider) is currently actively exploring launching a Bitcoin-backed fund for the Nasdaq. Perhaps this new fund, if it gets going at all, will set the standard for a global acceptance of this idea. We’ll just have to wait and see. ASIC doesn’t sound like it’s in a hurry to give a green light though.