The Australia Securities and Investments Commission (ASIC) has released its answer to public comment on bitcoin exchange-traded products (ETPs), as well as new industry recommendations.
Following weeks of industry discussion that began in late June, the SEC announced a range of regulatory criteria for funds wanting to provide crypto ETPs, comprising exchange-traded funds (ETFs) and structured products, on Oct. 29.
The advisory states that in order to be an appropriate basis for a crypto ETF, crypto-assets must have a high degree of institutional support, a mature spot market, a regulated futures exchange, reputed and reliable wireless carriers, and a clear cost structure.
Licensed exchanges must evaluate whether the issuer is capable of fulfilling its duties in respect to the product, such as providing safe and secure custody and securing applicable licenses, for each cryptocurrency ETF product request.
As per the official advice, ASIC has so far approved ETPs based on prominent cryptos such as Bitcoin (BTC) and Ether (ETH), and it anticipates that more crypto commodities will be used as a framework for ETPs in the future:
As of October 2021, Bitcoin and Ether appear likely to satisfy all five factors identified above to determine appropriate underlying assets for an ETP. We expect the range of non-financial product crypto-assets that can satisfy these factors will expand over time.
The announcement comes just days after Cosmos Asset Management, an Australian hedge fund manager, presented its crypto commodities ETF on Chi-X Australia on October 28. The Cosmos Global Digital Miners Access ETF, which started trading under the ticker DIGA, monitors a number of companies including Riot Blockchain, Marathon Digital, Hive Blockchain Technologies, Hut 8 Mining, and others.
BetaShares, an Australian ETF provider, is also planning to introduce a crypto ETF connected to market businesses such as Coinbase and MicroStrategy. The crypto ETF will allegedly begin trading on the Australian Securities Exchange next week under the ticker CRYP.
In a response to the public comment, the ASIC also stated that it does not require national crypto storage for firms issuing crypto ETFs, stating that such limits would unjustly limit their ability to issue crypto ETFs.
“While we acknowledge concerns raised by respondents about overseas-based custody of crypto assets such as the potential for difficulties in recovering assets across jurisdictions, we consider it would be inappropriate to mandate a domestic custodian requirement,” the document reads.