Approve Bitcoin ETFs to protect investors
The regulator would be wise to approve cryptocurrency exchange traded funds (ETFs) as it would prevent investors from accessing riskier, unprotected options, according to an asset manager.
Last month, the Australian Securities and Investments Commission (ASIC) released a consultation giving approval to the launch of cryptocurrency products and it indicated Australia could see a Bitcoin ETF before the US.
There had been multiple applications made to the US’ Securities and Exchange Commission but none had been approved yet.
Speaking to Money Management, Jeff Yew, founder of Monochrome, said there had been a surge in interest by retail investors in cryptocurrency. With this in mind, it would be a good idea for the regulator to approve exchange traded funds (ETFs) to prevent them accessing riskier options.
Since the ASIC consultation, BetaShares and VanEck had both announced plans for a Bitcoin ETF while Commonwealth Bank of Australia had announced it would offer crypto to retail investors.
Yew said: “The interest in cryptocurrency is high so the longer the regulator delays it, the more people will look to access it in other ways. People are coming into the space so they need something which is regulated and offers investor protections. Without that on offer, there is a risk they explore riskier structures which are ungoverned”.
There were three options for exchange traded funds, he said, those which offered indirect exposure such as BetaShares Crypto Innovators ETF, those which traded futures and those which were spot-based crypto, which was the option pushed by VanEck.
“A spot-based ETF is the market’s preferred route and has cheaper operating costs than a futures one. It also has more security but there are regulatory hurdles at the moment so they are taking longer to come to market,” he said.
Meanwhile, Yew said he was disappointed that the Commonwealth Bank of Australia (CBA) opted to work with US crypto exchange Gemini rather than an Australian-based firm.
“The move by CBA is remarkable and very exciting, it will be a convenient way for retail investors to access crypto.
“It’s unfortunate they didn’t pick a local business as there are many players in Australia that they could have worked with, or at least discussed options with, before they went overseas.”
AUTHOR
Laura Dew
Recommended for you
Funds managers are being urged by financial advisers to improve their “outdated” education and communication about alternative funds as they actively target them towards retail clients.
GAM Investments has appointed Eric Finnell as its managing director for Australia after his predecessor left to take up the CEO role at Global X.
Fidelity International has looked internally to appoint a head of strategic sales and solutions for its Australian division, which is a newly created role for the business.
Lonsec’s deputy CIO Deanne Baker has highlighted what investment tools the firm is harnessing to mitigate the impact of geopolitical risks in its managed account offerings.
