The first ETF launched in Australia today
Supply and demand BTC,ETH
- The worlds of exchange-traded funds (ETFs) and cryptocurrency have collided, as investors can now take direct ownership of Bitcoin and Ethereum through an ETF.
- Initially coming to Australia through two providers, these three ETFs mean that Australia is now the eighth country in the world to offer direct Bitcoin exposure.
- The first 2 ETFs, ETFS 21Shares Bitcoin (EBTC) and ETFS 21Shares Ethereum (EETH), started trading on the CBOE exchange today, with the broker saying this is the first of its kind in Asia.
- Kanesh Chu, Head of Distribution at ETF Securities, highlights the work that has been going on with regulators since 2017, while noting the benefits of buying an ETF cryptocurrency in today's market.
- “Australian investor interest in cryptocurrencies has not diminished in recent months although we have seen a weaker performance and with the recent Bitcoin selloff as well, this could present an opportunity for investors who have been looking for attractive entry points into this new asset class.”
- The third option for investors is the Cosmos- Purpose Bitcoin Access ETF which is another ETF that is actually backed by Bitcoin. In this case, Cosmos has partnered with the first ever Bitcoin ETF provider.
- Dan Annan, CEO of Cosmos Asset Management, said the fund will provide investors with exposure to bitcoin in a familiar way.
- “This gives investors a safe and easy way to introduce cryptocurrencies into their asset allocation mix using the same tried and tested process they are already familiar with, and in a well-regulated and liquid market,” he explains.
How does this all work?
All three ETFs follow similar models.
- 2 ETF Security products will give you direct access to Bitcoin and Ether (the Ethereum transaction token) where the broker will buy it on your behalf.
- According to the company's statement, the funds do not use any derivatives of any kind. They are not built as funds fed into offshore ETFs. They also do not participate in any Bitcoin and Ether lending or betting.
- ETF Securities said all bitcoin and ether are being held offline (“cold storage”) and in Faraday cages, meaning off the internet and away from any uncontrolled flows of electricity. This greatly reduces the risks of hacking.
- Pretty much the same is the Cosmos ETF. Day by day, the Bitcoin in Purpose Bitcoin ETF is kept in a secure and offline wallet, which is separated from the internet, which greatly reduces the risk of theft. The infrequently used bitcoins will be stored with the Gemini Trust.
Cryptocurrency ETF Privileges
The main advantage of these assets is that they take on a lot of hassles of direct investing, by buying an ETF.
As such, she says that buying Bitcoin and Ether through an ETF has 3 main benefits for consumers:
- Bitcoin ETFs have better security. ETFs have an institutional level of security. These ETFs have been in Europe for two years and have yet to be hacked.
- fee structure. While you'll pay a fee regardless, ETFs charge an administration fee, and exchanges charge transaction or other fees. The broker says because on a regulated exchange with more competition, it will be a lower fee product.
- ETFs are a better fit with Super Self-Managed Funds (SMSF), with better tax arrangements. Due to its correlation, these ETFs will have super tax advantages. Buying directly into your SMSF can be more difficult.