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ASX Clears Way For Investors To Buy Listed Crypto ETFs
The ASX has cleared the way for the first listed funds investing directly in bitcoin after changing its operating rules to allow for trading of cryptocurrency assets.
Himanshu S.
10:33 5th May, 2022
Policy

In an amendment to its operating rules released on Wednesday, the market operator said had expanded “the list of acceptable underlying instruments … to include eligible crypto-assets”. The rule change also sets out the operating framework “to support the ASX’s assessment of whether particular crypto-assets are eligible crypto-assets,” the exchange said in an explanatory note.

Some exchange-traded fund managers have complained that the ASX has moved slowly to allow them to list cryptocurrency-related products, and some have turned to its rival – Cboe Australia – as an alternative exchange for listing.

One firm hoping to list a cryptocurrency related ETF product in Monochrome Asset Management, which in a note last month noted European markets had been “one of the main champions for listed products holding both bitcoin and cryptocurrencies”.

The rules released by the ASX show the exchange will accept an ETF if the manager of the fund holds cryptocurrencies in jurisdictions comparable to Australia and it is satisfied “large and well-regarded traditional financial institutions in Australia or comparable jurisdictions provide services in relation to that crypto-asset to institutional clients”.

The ASX must also be satisfied that there is a working spot market for that cryptocurrency, taking into account the number of major platforms dealing with the currency, the value and frequency of trading and “the effectiveness of arbitrage activity between major platforms and consistency of pricing across major platforms”.

Regulators and market operators elsewhere, however, have been lukewarm about the potential to list cryptocurrency-backed products. Several ETF managers already have products that allow investments in crypto-related sectors including currency mining and the provision of services to the industry.

In April, the US Securities and Exchange Commission began deliberating on whether to allow Grayscale to convert its $US40bn ($55.4bn) bitcoin trust into an ETF. Several of Grayscale’s rivals have already been denied in their attempts to list products, with the SEC citing concerns about unregulated platforms where surveillance is difficult. It has, however, approved ETFs holding cryptocurrency futures – those trade on platforms that are regulated.

In April, Cboe confirmed three cryptocurrency ETFs – to have been the first to offer investors direct access to the asset class – would have their listings delayed.

The manager of one of those – ETF Securities – has been vocal in its criticism of the ASX for its slow move on the asset class. In a statement, however, the ASX said there had not been a delay to clear the products through its monopoly ASX Clear. “Throughout, ASX Clear engaged extensively with Cboe and clearing participants, and kept ASIC, the RBA and the ACCC fully informed,” a spokesman said.

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