Australian fund manager BetaShares is set to list an exchange-traded fund made up of a round of crypto ventures on the Australian Securities Exchange (ASX) on Thursday, amid a whirlwind of fund launches geared towards giving investors exposure to crypto assets via global exchanges.
The new BetaShares ETF, using the ticker ‘CRYP’, promises to capture the “full breadth” of the crypto ecosystem by offering investors exposure to “pure-play” crypto companies — ones whose balance sheets are deeply entrenched in crypto assets — along with diversified companies with a crypto focus.
The fund says 85% of the index is focused on companies whose revenue comes directly from servicing cryptocurrency markets, or have at least 75% of their assets in crypto holdings, like crypto trading platforms, miners, and the businesses that supply their equipment.
The remaining 15% of the index will be made up of investments in diversified large cap companies, the fund said, that have overlap with the crypto ecosystem through at least one line of business.
Among them are Coinbase, the largest US-based cryptocurrency exchange (COIN), the Bitcoin mining company Riot Blockchain (RIOT), and business intelligence firm Microstrategy (MSTR).
BetaShares CEO Alex Vynokur told Business Insider Australia the ETF’s launch is an “exciting marker” set to offer value to investors looking to get involved in crypto assets without the speculative risk that comes with investing directly in tokens.
“We know that there are millions, millions of people around the world [invested in crypto], and close to 2 million Australians that have actually invested in cryptocurrency directly,” Vynokur said.
“But we also know for every person that invests directly in cryptocurrency, there is also a person that wants to have a diversified exposure to the company’s really thriving ecosystem.”
Vynokur said the fund wanted to focus on bringing investors the best of the crypto ecosystem’s “innovators” in a bid to challenge a number of industries with a “pick and shovel approach”.
It’s an approach that sits parallel to the one taken by Cosmos Asset Management, who on Thursday launched Australia’s first crypto-focused ETF, Cosmos Global Digital Miners Access ETF (DIGA), on the ASX’s biggest rival, Chi-X.
Like CRYP, the DIGA fund promises to include only the “purest” equities ETFs linked to crypto markets, though, without exposure to exchanges — like CRYP’s Coinbase offering — or other crypto go-betweens.
Cosmos itself is owned by Australian Bitcoin mining group, Mawson Infrastructure Group, which earlier this week announced plans to open Australia’s largest Bitcoin mine in Byron Bay, powered solely by renewable energy.
Where the two ETFs differ is their intent. Cosmos chief executive Dan Annan told the Australian Financial Review earlier this week that his fund’s newly launched ETF was only a “plan B” as the firm pushes to launch a Bitcoin ETF after its success in the US.
“There has been pent-up demand for a bitcoin ETF for some time,” Annan said. “That is still in the works with the regulator and exchanges but we began looking at ‘what is the alternative?’”
BetaShares, meanwhile, wants to make sure their crypto ETF can offer as much value as possible to investors before thinking about the risk that comes with Bitcoin. Even then, Vynokur said, funds like Cosmos and BetaShares still face serious regulatory hurdles despite the ASX’s progress on the issue.
Canada became the first country in the world to list a Bitcoin ETF earlier this year, amassing more than $US1 billion in assets in a single month. The US followed suit this week, when the first bitcoin futures ETF debuted trading on the New York Stock Exchange.
In March this year, the ASX told Business Insider Australia that digital assets had become too established for the exchange to turn a blind eye.
“You can see how mainstream this has become at an institutional level in developed markets, like the U.S., Canada, Europe, and the U.K. You can’t ignore that. We can’t ignore it, and we’re not,” ASX executive general manager Max Cunningham said.
“Local issuers who want to bring these products to market are not ignoring it either. So we are spending an enormous amount of time focused on this.”
Cunningham at the time wouldn’t be drawn on whether the exchange would approve a cryptocurrency ETF, but said that the huge demand for cryptocurrencies like Bitcoin and Ethereum meant that Australians were going to buy it one way or another.
“Because we were turning down a number of spurious offerings five or six years ago, there’s a perception that we have banned this asset class, and we have categorically not got a ban on it,” he said.
It followed similar comments made by regulator ASIC, which in February told a Senate committee that it did not object “in principal” to crypto ETFs.