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Crypto ETFs in Australia Get the Go-Ahead from ASIC Regulator

2 mins
Updated by Nanok Bie
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In Brief

  • The Australian Securities and Investments Commission (ASIC) released a set of guidelines and requirements for crypto exchange-traded products (ETPs).
  • The new guidelines will enable the listing of exchange-traded funds (ETFs) directly investing in cryptocurrencies or crypto-related assets.
  • Investment firms hoping to offer a potential Bitcoin ETF will be required to adhere to a set of best practice guidelines.
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The Australian Securities and Investments Commission (ASIC) released a set of guidelines and requirements for crypto exchange-traded funds (ETF).

The new standard issued by the regulator will enable the listing of exchange-traded funds (ETFs) directly investing in cryptocurrencies. The ETFs may also be directly invested in crypto-related ventures, such as crypto mining businesses and digital asset exchanges.

Investment firms hoping to offer a potential Bitcoin ETF will be required to adhere to a set of best practice guidelines. Many of these rules revolve around asset custody, with ASIC highlighting the “critical importance” of protecting and storing private keys. For instance, the guidelines suggest that private keys should be kept offline, with numerous backups stored at different locations. These locations should also be subject to “robust physical security practices.”

Digital asset custodians must also follow these heightened cybersecurity protocols. If investors’ crypto-assets are lost or stolen, those offering crypto-based ETFs must be able to compensate them, ASIC said. These investment firms must also apply for an expanded financial services license that specifically permits the custody of crypto assets.

“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” said ASIC Commissioner Cathie Armour.

Crypto ownership in Australia

Cryptocurrencies are trending in Australia as much as in any other part of the world. According to researcher Finder, one in six Australians owned cryptocurrency in 2021, amounting to a total of A$8 billion ($6.02 billion). Despite this popularity, many of Australia’s top financial institutions have found engagement with the cryptocurrency sector too risky.

Last week, Australian lawmakers led by liberal senator Andrew Bragg introduced a major new package of cryptocurrency reforms. The senate report advocates for new laws including tax discounts and a licensing regime to increase the competitiveness of digital asset miners with those in other countries.

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Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
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