The first test of mass Australian retail demand for crypto will happen next week with the listing of the country’s first bitcoin ETF on the Cboe equities trading venue.
There is speculation $1 billion will flow into the country’s first bitcoin ETF.
ASX Clear, the powerful clearing house at the centre 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.
Chanticleer understands there are now three institutional grade clearing participants and one significant retail clearing participant willing to provide the 42 per cent margin demanded by ASX Clear before allowing trading in a bitcoin ETF.
“We are now at our minimum number of clearing participants and that means we are good to go,” says Hamish Treleaven, the chief risk officer at ASX.
Treleaven will issue a notice to market participants on Wednesday giving seven days notice of ASX Clear’s regulatory approval.
The seven-day notice period will give brokers, clearers, clearing participants, market makers and investors time to prepare for the new product. This means the only bitcoin ETF product in front of ASX Clear at the moment – the Cosmos Asset Management bitcoin ETF – can start trading on the Cboe on April 27.
This is ironic given that critics said the delay in ASX Clear’s approval for trading a bitcoin ETF was protecting the ASX trading venue from competition.
The Cosmos product is essentially a fund of funds because it invests in the $C1.4 billion Purpose Bitcoin ETF listed in Toronto, Canada. This was the world’s first bitcoin ETF.
It is believed Cosmos has a product disclosure statement for its bitcoin ETF which has been screened by ASIC.
Cosmos entered the crypto funds management space last year with a product called the Global Digital Miners Access ETF which has net assets of $2.1 million and is traded on Cboe Australia and the unlisted $4.55 million Bitcoin Wholesale Access Fund. Other fund managers who have been working on bitcoin ETFs include ETF Securities, VanEck Australia, BetaShares and Monochrome Asset Management.
The bitcoin ETF breakthrough comes two years after the Australian Securities and Investments Commission wrote to a bitcoin financial promoter ruling out a listed retail bitcoin product in Australia.
The letter said the issue was not up for debate and this was the policy of ASIC. The securities regulator later changed its policies following pressure from politicians to encourage innovation in capital markets.
Treleaven says the ASX Clear was always confident it had a robust process for approving a bitcoin ETF despite criticism from some quarters that it was moving too slowly. He says Cboe will go through its own risk management and due diligence before going ahead with listing a bitcoin ETF given that it is a novel and complex product.
ASX Clear’s approval for clearing bitcoin ETFs means other trading venues including the NSX could list a bitcoin ETF.
