As reported by Business Insider Australia, the ASX could launch a cryptocurrency-based exchange-traded fund (ETF) as soon as this year.
Although they have not specified exactly when it will go live or which companies are applying as providers, they have confirmed that they have been “spending an enormous amount of time” focusing on the digital assets space.
Huge Demand for Crypto In Australia
According to Max Cunningham – Executive General Manager at ASX – recent developments in Canada, Europe and elsewhere have compelled the ASX to look into the creation of a local ETF for cryptos
I think there’s an inherent obligation for us and the regulator and other key decision-makers to ensure that, if these assets are broadly being sought by retail investors, that we not only have the safeguards in place but that we have good transparent and low-cost mechanisms for them to access it.Max Cunningham, Executive General Manager at ASX
Cunningham wouldn’t be drawn on the issue, but would say that the huge demand for cryptocurrencies like Bitcoin and Ethereum meant that Australians were going to buy it one way or another.Business Insider Australia
The ASX is Turning Pro Crypto
Mr Cunningham also stated that the commonly held opinion of the ASX having a negative view of cryptocurrencies is false.
Because we were turning down a number of spurious offerings five or six years ago, there’s a perception that we have banned this asset class, and we have categorically not got a ban on it.Max Cunningham, Executive General Manager at ASX
Joke Coins Will Not Make the Cut
He also went on to say certain cryptocurrencies bring concerns for price manipulation. Certain “coins being established as jokes” that show great volatility “just by someone putting a tweet out” seem therefore unlikely to make the cut to get listed.
Despite the forms and spreadsheets to be filled before an Aussie crypto ETF can be established, it looks like investors might be able to buy cryptos from sources other than the usual exchanges in a not distant future.
What is a Crypto ETF?
An exchange-traded fund (ETF) is a type of investment fund. […] An ETF holds assets such as stocks, bonds, currencies, and/or commodities. […] Most ETFs are index funds, that is, they hold the same securities in the same proportions as a certain stock market index or bond market index.What is an ETF? Wikipedia
Bitcoin ETFs are exchange-traded funds that track the value of Bitcoin and trade on traditional market exchanges rather than cryptocurrency exchanges. They allow investors to invest in bitcoin without having to go through the hassle of using a cryptocurrency exchange while providing leverage to its price.
Using pooled investment funds, the funds purchase the actual bitcoins and hold them in “cold storage” — an offline destination that can’t easily be hacked or breached. The ETFs then track the performance of bitcoin in US dollars (or such) on a specific index.
Further Benefits of buying Bitcoin through an ETF include:
- Trading flexibility
- Portfolio diversification and risk management
- Lower costs
- Tax benefits
- Familiar investment structure
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