The race to list the first exchange-traded fund (ETF) that tracks prices of cryptocurrencies on the Australian sharemarket is hotting up, with at least three contenders in the process of finalising regulatory approvals.<\/p>\n
Local ETF providers BetaShares, EFT Securities and VanEck are among those seeking first-mover advantage amid hopes Australian-listed crypto ETFs will be well-supported by investors.<\/p>\n
The first US-listed Bitcoin ETF started trading in October 2021. It debuted as one of the most heavily traded ETFs ever, attracting more than $1 billion in the first few days. Technically, it does not hold Bitcoin, but Bitcoin futures.<\/p>\n
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VanEck\u2019s Arian Neiron says his firm is keen to get crypto ETFs to market.<\/span>Credit:<\/span>Louise Kennerley<\/cite><\/p>\n Units in ETFs can be bought and sold just like shares in listed companies. They track the prices of all types of markets. Crypto ETFs are convenient for investors who otherwise face the hassles of owing crypto directly, such as the need to go through an exchange, and to have passwords and digital wallets to invest in digital assets.<\/p>\n Arian Neiron, chief executive and managing director of VanEck Asia Pacific, says it is taking its time to get it right. The ETFs that will track Bitcoin and Ether will be liquid and cost-effective, he says.<\/p>\n \u201cWe would like to be first, but we want to be first with the highest-quality products as that is what matters,\u201d Neiron says.<\/p>\n BetaShares\u2019 chief executive Alex Vynokur says it is a marathon rather than a sprint as his firm seeks to launch ETFs tracking Bitcoin and Ethereum.<\/p>\n As a new asset class, there are a number of hurdles through which providers have to jump, Vynokur says.<\/p>\n The Australian Securities and Investments Commission gave ETF providers the green light for crypto ETFs last year, but the firms have to satisfy a number of conditions aimed at protecting investors before they can launch the ETFs.<\/p>\n Vynokur says it may not be until later this year until his company is ready to launch crypto ETFs.<\/p>\n \u2018Crypto ETFs may provide just that extra layer of security many ETF investors are looking for.\u2019<\/p>\n An indication of the appeal of ETFs to Australian investors has been provided by research by Investment Trends, in partnership with BetaShares, showing that almost 20 per cent of current ETF investors would like access crypto ETFs.<\/p>\n That is double the level of interest in 2020. The ETF sector is rapidly growing. Investment Trends estimates that more than 1.7 million people are invested in ETFs – 33 per cent more than a year ago. Just over 20 per cent of new ETF investors are females aged between 18 and 34 years old.<\/p>\n Irene Guiamatsia, head of research at Investment Trends, says: \u201cDirect access to crypto is perceived to be more risky than any alternative [such as crypto ETFs] that would feature a regulatory stamp of approval.\u201d<\/p>\n Cryptocurrencies can be vulnerable to scams. A potential weak point for investors who hold cryptocurrency directly is the crypto exchanges that hold private encryption keys required by users to transact. Several exchanges have simply disappeared, or been attacked by fraudsters.<\/p>\n \u201cCrypto ETFs may provide just that extra layer of security many ETF investors are looking for,\u201d Guiamatsia says.<\/p>\n Cryptocurrencies are notoriously volatile and considered just too risky for many investors, with price swings of 10 per cent or more not uncommon for Bitcoin.<\/p>\n Supporters of crypto have said their prices tend to move independently of other asset classes, making them a good way to diversify an investment portfolio. However, recently, Bitcoin has risen and fallen in lockstep with major US indices such as the tech-heavy Nasdaq.<\/p>\n The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. <\/i><\/b>Sign up to get it every weekday morning<\/i><\/b>.<\/i><\/b><\/p>\nMost Viewed in Money<\/h2>\n
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