Australia to release its first crypto-ETF, but it wont be backed by Bitcoin, Ethereum
Amid rising fervor for a Bitcoin ETF approval in the United States, the Australian Securities Exchange (ASX) is all set to feature its very first cryptocurrency-focused ETF. Australian ETF provider BetaShares is close to launching the “BetaShares Crypto Innovators ETF,” which will have the ticker code “CRYP.”
However, there’s a catch. Instead of being directly backed by any cryptocurrencies, the fund will instead focus on global companies that are working in the digital asset space, as per the company’s announcement.
The fund aims to provide indirect crypto exposure to institutional investors looking to put their capital into the space with a minimum risk factor. The announcement further quoted BetaShares CEO, Alex Vynokur, as saying,
“The crypto economy is highly dynamic and growing rapidly, and is built using exciting and disruptive technology. CRYP will be an innovative way for investors to get exposure to the crypto sector in a familiar, liquid, and cost-effective ETF structure.”
It also mentioned that CRYP will “aim to track an index comprising a focused portfolio of more than 30 leading crypto innovators.” The index in question is the Bitwise Crypto Industry Innovators Index, which had launched earlier this year to provide investors with exposure to top publicly listed firms that are working in the cryptocurrency and blockchain industries.
The announcement noted that these include top cryptocurrency exchange Coinbase, Bitcoin mining company Riot Blockchain, and Michael Saylor’s MicroStrategy as current index constituents. Moreover, 85% of the fund is exposed to companies that gain at least 75% of their revenue from these industries, ensuring adequate exposure to its investors. Vynokur further elaborated that,
“The crypto economy is highly dynamic and growing rapidly and is built using exciting and disruptive technology… CRYP will take a ‘pick and shovel’ approach to the crypto sector, investing in the companies that are driving the crypto economy.”
While the company had to wait six months since it first filed for CRYP’s approval, the wait for an ETF that is physically backed by cryptocurrencies could be much longer. As per a report in the Australian Financial Review, the company is still aiming to release such an ETF but is facing several regulatory hurdles along the way.
Australian Securities and Investment Commission chair Joseph Longo raised concerns about the lack of regulation and legislation surrounding crypto-based assets with the House of Representatives last month. The agency had also noted that the lack of regulation was making it difficult to approve crypto-ETFs, as they presented significant harm to investors.
Even as countries like Canada and Brazil have already released ETFs backed by currencies beyond Bitcoin, this regulatory uncertainty is proving to be similarly disruptive to the American crypto community, which has long been anticipating the approval of at least one of several pending applications with the SEC.