Bitcoin & Ethereum ETFs Receive Preliminary Green Light in Australia from ASIC

by Eva Fox October 29, 2021

Bitcoin & Ethereum ETFs Receive Preliminary Green Light in Australia from ASIC

Fund managers looking to launch ETFs with underlying crypto assets will soon be able to do so after the Australian Securities and Investments Commission (ASIC) offered an early green light to products that include Bitcoin and Ethereum.

After months of research and industry consultation, Australia's corporate regulator posted on Friday its response to the use of cryptoassets as the underlying assets for exchange-traded products, or “ETPs.” In addition, it has published new guidance for this area detailing the many regulatory requirements for funds wishing to offer ETFs with underlying cryptoassets, reported Business Insider.

“We recognize the interest in, and demand for, ETPs and other investment products that hold crypto-assets in Australia,” ASIC wrote in a statement on Friday. “However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly,” it added.

Under the new guidance, fund managers will have to appoint a crypto custody expert who will be “required to ensure crypto-assets are held in safe and secure custody.” In addition, funds will also need to have at least $10 million in net tangible assets to launch a crypto ETF and comply with other pricing, disclosure, and risk management obligations.

Despite the general list of requirements, the regulator will continue to apply an individual approach to licensing cryptocurrencies for listing. So far, only Bitcoin and Ethereum have been approved. “We proposed this because we recognize that crypto-assets vary greatly in their features, characteristics, risks and how they operate, and we consider that only some may be appropriate to be held by a registered managed investment scheme,” ASIC said.

ASIC Commissioner Cathie Armor said these new guardrails were necessary to mitigate some of the risks that come with products like these. “Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” Armor said.

© 2021, Eva Fox | Tesmanian. All rights reserved.

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