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Australia`s first Bitcoin ETF gets the green light

TL;DR Breakdown

  • The first Bitcoin ETF on the Australian Securities Exchange (ASX) is expected to launch next week.
  • The approval is expected to arrive on Wednesday after participants agree on a stringent 42% margin requirement for the offering.

The first Bitcoin exchange-traded fund (ETF) on Australia’s primary market, the Australian Securities Exchange (ASX), will be launched next week. The move follows the signing of four market participants who will provide margins for the instrument by standards set by Clearing House ASX Clear, as reported by the Australian Financial Review.

Australia’s first-ever Bitcoin ETF to list next week

Cosmos Asset Management has established Australia’s first Bitcoin ETF, which will trade on the CBOE equities exchange. According to a press release issued by the company, Cosmos Asset Management may launch its bitcoin ETF as early as April 27.

However, unlike other similar products throughout the world, Australia’s first Bitcoin ETF would not invest in BTC directly. However, it will invest in a Bitcoin ETF offered by Purpose Investment. The ETF was North America’s first Bitcoin spot ETF that began trading in early 2021. Cosmos partnered with Purpose Investments in February.

The Australian Securities Exchange (ASX) announced requiring a 42% margin to allow a Bitcoin ETF to trade under its umbrella. According to reports, there are now three institutional-grade clearing firms and one retail clearing firm reported willing to provide the necessary margin for a Bitcoin product.

We are now at our minimum number of clearing participants, and that means we are good to go.

Hamish Treleaven, Chief Risk Officer at ASX

For the margin, Aussie’s Clearing House for all futures and options products, ASX Clear, noted it has four market participants willing to stump up the requirements needed to cover the settlement risks for this highly volatile asset. As a result, on 20 April 2022, ASX Clear will give market participants a seven-day regulatory approval notice. The notice will provide brokers, clearers, clearing participants, market makers, and investors with a seven-day lead time to prepare.

Nasdaq-listed Bitcoin miner Mawson Infrastructure Group’s Cosmos, which crept into the cryptocurrency fund management business last year, has taken significant steps toward the sector. It debuted in the market with a product that invested in Bitcoin mining firms through the Global Digital Miners Access ETF.

According to the report, other asset management firms interested in launching Bitcoin-linked ETFs in the country include ETF Securities, VanEck Australia, BetaShares, and Monochrome Asset Management.

The Cosmos Bitcoin ETF is a fund of funds that invests in the Canada-listed Purpose Bitcoin ETF. Cryptocurrency fund manager Cosmos Capital has teamed up with Purpose Investments to create Bitcoin ETFs in the country. Reports also indicate that Cosmos has submitted its bitcoin ETF declaration to the Australian Securities and Investments Commission (ASIC).

Australia’s growing crypto adoption

Given that critics said the delay in ASX Clear’s approval for trading a Bitcoin ETF safeguarded the Australian exchange venue from the competition, this news appears peculiar. According to reports, the approval of a Bitcoin ETF is two years after the Australian Securities and Investments Commission rejected a proposed retail Bitcoin product in the country.

The correspondence stated that the topic was not up for discussion, which was ASIC’s policy. The securities regulator reversed its policies due to political pressure to support innovation in capital markets.

Despite criticism from various quarters that it was moving too slowly, ASX Clear says it has always been confident in its ETF approval procedure. According to Treleaven, CBOE will undertake risk management and due diligence before listing a Bitcoin ETF because it is a new and intricate product.

The Australian Securities Exchange has said it will allow trading in Bitcoin ETFs. Several cryptocurrency exchanges have stated that they may list a Bitcoin ETF once the ASX’s approval for clearing Bitcoin ETFs becomes official.

The number of crypto users in the country is increasing rapidly, with institutional and retail investors flocking to the market. According to several surveys, most Australians possess cryptocurrencies and conduct transactions at local stores. Recent news from the convenience store and gas station operator On The Run (OTR) revealed that the firm would begin accepting cryptocurrencies.

Furthermore, with the government’s introduction of friendly laws and regulations, the crypto environment in Australia has improved. It has enabled crypto exchanges like FTX to enter the market. The first Bitcoin ETF will also contribute to the advancement of cryptocurrency adoption in Australia.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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