Australia’s First Crypto ETFs Delayed ‘Due to Prime Broker’

April 28, 2022, 10:15 AM AEST - 3 weeks ago

Australia’s first crypto exchange traded funds (ETFs) have been delayed at the last minute with an undisclosed third-party broker said to be responsible for preventing trade that was otherwise scheduled to commence yesterday.

A Disappointing Start

Following last week’s approval by Australian regulators of a Bitcoin and Ethereum ETF, executives at fund managers Cosmos Asset Management and ETF Securities were no doubt eagerly awaiting the launch of their historic investment products.

After months of endless delays and hiccups, their excitement surely soured as Cboe Australia confirmed late on Tuesday that none of the ETFs would begin trading at 10am on April 27. According to its statement, this was on the basis that “standard checks prior to the commencement of trading [were] being completed”. The exchange declined to provide any further details.

Despite the setback, Kanish Chugh, head of distribution of ETF Securities, remained upbeat, describing it as a “temporary delay” through “no fault whatsoever of ETF Securities, our ETFs, or the exchange”. He added:

We believe the issue affects all fund managers equally and has caught everyone by surprise. We are working to resolve this as quickly as possible and remain on track to launch Australia’s first bitcoin and ethereum ETFs.

Kanish Chugh, head of distribution, ETF Securities

‘Prime Broker’ Responsible

According to Cosmos and ETF Securities, the delay was due to a “service provider downstream” who needed more time to support trade. While details remain murky, it’s understood that the responsible party is a “prime broker”, a market participant whose approval is required for smooth market making operations.

Eager to clear its name, an Australian Securities Exchange (ASX) spokesman said its position had not changed and that “matters are now in the hands of the trading venues [in this case, Cboe] and their issuers and brokers”.

Other fund managers such as VanEck Australia and Monochrome Asset Management have also applied to list crypto ETFs, although on the main ASX exchange. To date, they haven’t lodged product disclosure statements with the Australian Securities and Investments Commission (ASIC), implying a “wait-and-see” approach rather than striving to be first.

Time will tell which approach works better. Capital inflows, rather than marketing and “being first”, are surely the ultimate judge of success.

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