It's been less than two full weeks since the Betashares Crypto Innovators ETF (ASX: CRYP) landed on the ASX, yet Australian crypto investors might soon see even more options made available.
The launch of Australia's first exchange-traded fund (ETF) that offers exposure to companies involved with cryptocurrencies was met with incredible demand.
On its first day, the new ETF broke records for a new managed investment on the ASX. By the end of the session, the CRYP ETF had amassed at least $42 million in funds under management. Astonishingly, this is about five times greater than any other ASX-listed ETF in history on its first day.
Having proven the viability for a crypto-linked ETF, fund managers in Australia are now charting a course for a crypto-backed product. A crypto-backed product would enable investment of cryptocurrencies directly through an ETF structure.
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A pure crypto ETF on the ASX?
In recent months it has been a whirlwind of achievements for crypto enthusiasts. Notably, the first United States Bitcoin (CRYPTO: BTC) ETF launched in late October — the ProShares Bitcoin Strategy ETF (NYSE: BITO). Although, the fund doesn't actually own Bitcoin. Instead, it uses Bitcoin futures to replicate the market's movements.
Currently, issuers are contending with the US Securities and Exchange Commission (SEC) to launch a 'spot' ETF. This would be the purest form of a cryptocurrency ETF, as the fund manager is expected to hold actual cryptocurrency in its holdings.
In a recent report, the Australian Securities and Investments Commission (ASIC) recognised the demand for investment products that hold crypto assets in Australia. As such, the corporate regulator has given these investments the green light, with the responsibility passed onto the exchanges.
At this stage, there are numerous issuers believed to be working with the ASX for a crypto-backed ETF. In speaking with the Australian Financial Review an ASX spokesperson said:
We are very aware of the high level of interest among investors for products that provide access to these assets. We are also closely monitoring developments in other jurisdictions.
One fund manager that is hoping to be among the first is VanEck. However, there are other contenders hot on its heels. It is understood that BetaShares and Cosmos Asset Management are among other fund managers working on a crypto-backed ASX ETF.
Watching and waiting
As the ASX spokesperson mentioned, the Australian exchange is watching other jurisdictions. Currently, the only jurisdiction running a spot Bitcoin ETF is the Toronto Stock Exchange in Canada.
The Purpose Bitcoin ETF allows local investors to gain exposure to the original cryptocurrency. Unlike other options, this fund holds a total of 24,240 Bitcoin for its investors. This equates to a total of US$1.6 billion in assets under management.
Despite this, regulators around the world remain sceptical of the new breed asset.
