ETF Securities claims to have won the race to launch Australia’s first bitcoin and ether ETFs.
Cosmos Asset Management, 3iQ and other companies have jockeyed with ETF Securities to list first, but the latter said it has ended the multi-year competition between ETF providers.
Both ETFs – 21Shares Bitcoin ETFS (EBTC) and 21Shares Ethereum ETFS (EETH) are expected to begin trading on Cboe Australia on Thursday.
The launch of these products will be the first of its kind in Asia and a major step in mainstreaming cryptocurrency ownership.
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In a statement, ETF Securities said that before the launch, Australians who wanted to buy bitcoin or ether were forced into unregulated crypto exchanges. But now, having introduced the cryptocurrency in the form of ETFs, investors can now trade and own it in a tightly regulated environment with government oversight.
ETF Securities cryptocurrency ETFs were created in partnership with 21Shares. Under the partnership, ETF Securities will manage the funds while 21Shares will provide research and operational support.
EETH and EBTC will directly hold Bitcoin and Ether. But, in addition to direct ownership, investors who buy EBTC and EETH will also be able to redeem Bitcoin and Ether at any time.
Quashing any potential concerns, ETF Securities noted that the funds will not use any type of derivatives and are not designed as feeder funds into offshore ETFs. Additionally, ETF Securities will not engage in any lending or staking practices.
All bitcoin and ether will be kept offline (“cold storage”) and in Faraday cages, which means being away from the internet and away from uncontrolled electricity flows. Both of these storage methods will greatly reduce the chances of hacking.
The process of launching these ETFs began in 2017 when ETF Securities first approached Australian regulators. A launch was originally scheduled to take place in late April, but delays were forced due to issues with a downstream service provider.
ETF Securities Head of Distribution Kanish Chugh said, “These funds are the culmination of many years of hard work by the teams at ETF Securities and 21Shares. We have worked with regulators, service providers and other stakeholders to ensure they are best in class.
“Australian investor interest in cryptocurrencies has not waned in recent months, although we have seen some underperformance and with the recent selloff in bitcoin as well, this may present an opportunity for investors who have been looking for attractive entry points into this new asset class.”
Recently, Bitcoin and Ethereum prices have been decimated. Bitcoin’s market capitalization has fallen to US$500 billion from its peak of US$1.1 trillion in October 2021. Over the past five days, the digital asset has also seen a price drop of 15 % and is down 51% from its all-time highs.