A string of cryptocurrency-related ETFs has gained a green light from Australia’s corporate regulator. Perhaps, the coming months might witness these ETFs trading Bitcoin and Ethereum-backed funds on the ASX. A set of guidelines were released by the Australian Securities Investments Commission(ASIC) on Friday.
The What and Why
Discussions have been going on since June, following which these guidelines related to crypto ETPs were finally released on Friday. The new guidelines will facilitate the launching of exchange-traded funds with direct cryptocurrency investment. Such offerings have gained increased attraction from several local funds in Australia. Various securities and commodities can be purchased with the help of ETF. These purchases can be done without any direct exposure to the assets. Several investors have been asking for an ETF that will keep track of the prices of major cryptocurrencies. This would prove to be useful in providing ample exposure to traditional investors. For a long time now, ASIC has been contemplating approving such funds and finally, we have a green signal to carry forward with it. Today’s announcement concerning the ETFs is quite in line with the major new crypto reforms package that was tabled in the parliament about two weeks ago by Liberal senator Andrew Bragg.
Those investment firms who intend to establish a Bitcoin ETF will be expected to adhere to certain best practice guidelines. These will consist of strict rules concerning asset custody and so on. Crypto asset custodians will also be expected to use heightened cybersecurity protocols. And in case the assets are lost or stolen, the crypto ETFs should be accountable and provide the investors with some sort of compensation. Another pre-requisite for the funds will be the expanded financial services license that will permit the custody of crypto assets.
ASIS is well aware of the fact that crypto-assets are quite different from the rest, with their own specific characteristics and risks. Therefore, it emphasizes the necessity for market operators to work by keeping these in mind. The guidelines provided by the ASIC will prove to be a useful roadmap that will help the market operators to meet the various obligations. These will also ensure the security and protection of investors, while also making sure that the markets are secure and transparent. The guidelines will also place particular stress on market operators such as ASX who will have to meticulously assess the acceptability of the cryptocurrencies for the ETF. Overall, the regulatory guidance is welcomed with a certain level of optimism.
