ASX set to welcome first cryptocurrency ETF… but there’s a catch

The ASX is set to host its first crypto ETF, sort of…

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a cryptocurrency blockchain miner acts with surprise upon looking at his phone while standing behind a conglomeration of technology to access cryptocurrency.

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The ASX is home to more exchange-traded funds (ETF)s than most of us could imagine. Sure, you have the vanilla index funds like the Vanguard Australian Shares Index ETF (ASX: VAS) that remain uber-popular. But there are also ETFs covering what seems to be everything under the sun.

There are ETFs for crude oil, gold, silver, platinum and palladium exposure. Want an ETF that tracks the South Korean economy? Easy. Or Indian shares? Done. ASX ETFs also cover cash, property or government bonds. Like we said, everything under the sun.

Well, not exactly. There is one glaring exception. And that would be cryptocurrencies like Bitcoin (CRYPTO: BTC). Cryptos are perhaps the only major asset class not covered by an exchange-traded fund on the ASX today.

But that might be about to change.

ETF provider BetaShares has just announced that it will be launching a cryptocurrency-based ETF, a first on the ASX. It will be known as the BetaShares Crypto Innovators ETF and will have the ticker code ‘CRYP’.

There is a catch though. This ETF won’t be directly investing in cryptocurrencies like Bitcoin, Ethereum (CRYPTO: ETH) or even Dogecoin (CRYPTO: DOGE). Rather, it will be focusing on the “global companies driving the rapidly growing crypto economy”.

Will this new cryptocurrency ETF invest in Bitcoin?

BetaShares tells us that CRYP will “aim to track an index comprising a focused portfolio of more than 30 leading crypto innovators”, including Coinbase Global Inc (NASDAQ: COIN)Riot Blockchain Inc (NASDAQ: RIOT) and MicroStrategy Incorporated (NASDAQ: MSTR).

In this way, BetaShares is aiming to tap “picks and shovels” exposure to crypto rather than directly holding cryptocurrency assets — and the “complications” that come with it. You can expect CRYP’s other holdings to contain companies that enable “crypto mining equipment, crypto trading venues, and other key services that allow the crypto economy to thrive”.

According to a report in the Australian Financial Review (AFR) today, BetaShares CEO Alex Vynokur says the company is still aiming to release an ETF backed directly by cryptocurrencies but reckons the regulatory framework just isn’t there yet.

“But we’re well on our way,” he told the AFR. “An ETF structure provides much-needed investor protection, and transparency and accountability, things that investors don’t get now buying cryptocurrencies in unregulated venues.”

It’s not BetaShares’ first attempt at a crypto-focused ETF though. Back in 2018, BetaShares announced its intentions to launch a similarly-themed ETF called the BetaShares Global Blockchain Innovators ETF (ASX code was to be BLOK). However, this ETF never launched and has presumably been put on ice.

Hopefully, this new cryptocurrency ETF from BetaShares will fare a lot better than its predecessor.

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Motley Fool contributor Sebastian Bowen owns shares of Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended MicroStrategy. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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