Australia is set to host its first direct-access crypto exchange-traded funds (ETF) this week with at least two new products due to launch on April 27.
In a joint venture between specialist Australian provider ETF Securities and the Switzerland-based 21Shares, the two funds tracking bitcoin and ethereum, respectively, will list on the Cboe exchange (formerly known as Chi-X).
Graham Tuckwell, ETF Securities executive chair, said in a release that the two funds would offer a first-of-a-kind way for investors to gain exposure to the two leading crypto assets without taking on individual set-up and management risks.
Investing in crypto-assets via regulated funds could combat risks such as “low exchange quality, weak custody arrangements, vulnerability to hacking and the loss of private keys and passwords”, the release says.
The new ETFs will strike a unit price every day based on data provided by “CryptoCompare at 3pm Central European Time”, the statement says, with underlying assets held in ‘cold storage’ by US-based exchange, Coinbase.
Tuckwell said 21Shares – a four-year-old company headquartered in the Swiss crypto enclave of Zug – was the “only one partner we wanted to work with” to build the new ETFs.
“[21Shares’] pioneering approach to secure investment in cryptocurrency has been emulated by other fund managers around the world,” he said.
According to the statement, 21Shares holds over US$2.5 billion in assets under management across 30 exchange-traded crypto-products.
Hany Rashwan, 21Shares co-founder and chief, said the group had other crypto products in development for the Australian market.
The Australian Financial Review also reported another crypto-linked ETF was slated for launch on the Cboe this week after Cosmos Asset Management – a subsidiary of Nasdaq-listed bitcoin-miner Mawson Infrastructure Groupo – secured clearing house support for its proposed bitcoin fund.
“ASX Clear, the powerful clearing house at the center of Australia’s equity capital markets, now has four market participants willing to stump up the tough margin requirements needed to cover the settlement risks for this highly volatile asset,” the AFR report says.
Market participants will have to stump up a 42 per cent margin for clearing bitcoin fund trades via ASX Clear.
The Cosmos fund will invest into the Purpose Investment bitcoin ETF, which listed on the Canadian exchange last year.
Purpose is also one of the underlying managers in the Vault International Bitcoin Fund, the NZ-based unlisted vehicle released last year that is pitching for business on both sides of the Tasman.