History will be made next week as Australia looks set to usher in its first Bitcoin (CRYPTO: BTC) exchange-traded fund (ETF).
In a monumental step for the cryptocurrency community, Cboe Australia (formerly Chi-X) will welcome the first crypto-backed ETFs in the country on 27 April. Making this event a reality is Sydney-based investment company Cosmos Asset Management, which has received the all-clear for its Bitcoin ETF product.
Demand for cryptocurrency products has been elevated despite the Bitcoin price being down 14.7% year-to-date.
Leading the charge for Bitcoin in Australia
If all goes to plan, Cosmos will be making it possible for Aussie investors to gain access to Bitcoin through an ETF on Wednesday. However, how this is being done may not be how you would have thought.
Cosmos won't be directly buying and holding Bitcoin to back the ETF. Instead, the asset manager has partnered with Toronto-based Purpose Investments to bring this product to life.
For context, Purpose introduced the first 'physically-backed' Bitcoin ETF in the world around a year ago, appropriately titled the Purpose Bitcoin ETF. At present, the Purpose ETF holds A$1.08 billion in assets under management.
The product being offered by Cosmos will act as a conduit to the Purpose ETF. In simple terms, for every $1 someone invests in the Cosmos fund, Cosmos will buy another $1 worth in the Purpose ETF.
According to the AFR, ASX Clear has reached the minimum number of four stockbroking firms to proceed with the launch. Reportedly, the clearinghouse is requiring the participating firms to provide 41% of the collateral for trades. A proposition that ETF Securities chair Graham Tuckwell finds to be "ridiculous".
Where to next for the Bitcoin ETF market?
People within the ETF industry are speculating that $1 billion could find its way into the crypto product upon launch. Unsurprisingly, with such obscene numbers being thrown around, others are also looking to tap the market.
$1 billion is expected to flow into
— Blockworks (@Blockworks_) April 19, 2022Australia's first #Bitcoin ETF
– @FinancialReview
It is believed that ETF Securities is working with 21Shares to create its own Bitcoin ETF. In addition, an Ethereum (CRYPTO: ETH) is said to be in the works.
Although, Tuckwell has simmered expectations for billion-dollar inflows, stating:
I don't think it will be millions and millions of dollars on days one, two or three.
Other experts are containing their excitement until an ASX-listed Bitcoin ETF appears.
