Australia’s digital assets industry has marked a major milestone with the first crypto ETFs – two from 21Shares (EBTC and EETH), and another from Cosmos Asset Management (CBTC). More ETFs – Bitcoin and Ethereum focused, are set for launch from 3iQ, a large Canadian competitor.
However, the new 21Shares and Cosmos investment products haven’t fared well in terms of trading volume as the ETFs were launched amid the TerraLUNA stablecoin collapse. That week was one of the bloodiest weeks for the global crypto industry. Despite the market crash and crypto’s lowest low point, 3iQ’s Fred Pye believes it’s a decent time for them to launch. He says that they are lucky that Bitcoin is in a bit of a holding pattern so the funds will be established in the market before the next potential run-up. Pye sees it as an “excellent time”.
Jonathon Miller, Kraken Australia Managing Director, regards Australia’s ETFs as a significant milestone for the maturation of the digital assets space. He says it’s a good measure of where Bitcoin is in its adoption journey. But Miller also believes they don’t necessarily represent a watershed moment for accessibility. He pointed out that crypto investors can already buy Bitcoin directly and each layer of abstraction away from the underlying asset can add risk and cost. Miller says crypto exchanges like Kraken offer both institutional and retail clients onramp and offramp solutions with lower fees than ETFs traditionally charge. It’s difficult to see how crypto ETFs fit into the mix.
Daniel Sekers, the MD of the Australian crypto trading and gift card platform YourPortfolio, says the new ETFs are a big step in the right direction for the adoption of the asset class. Ian Lowe, the CEO of Dacxi, sees it as another milestone in this ever-changing investment landscape. Sekers and Lowe highlighted the relatively high fees ETFs generally put in place. It’s time for a diversified digital-assets portfolio, which the new ETFs currently do not provide.
Sekers says the key reason to hold an ETF is direct exposure to diversified assets. He explained that the newly formed ETFs are primarily holding two currencies, that is Bitcoin and Ethereum. As such, it’s unlikely to offer diversified exposure to the asset class.