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The Australian Securities and Investments Commission (ASIC) just released new guidelines on establishing crypto ETPs in the country. Alongside numerous regulatory requirements, the commission is tentatively permitting Bitcoin and Ethereum backed spot ETFs to launch. Incredibly, they are also willing to evaluate other cryptocurrency’s suitability as underlying assets for such products.
Australia’s Approach to Crypto ETFs
ASIC revealed its openness to digital asset ETFs in response to the crypto industry earlier today. This was a follow-up to the commission’s consultation paper released in June, offering initial regulatory ideas regarding these products. They consulted the crypto industry in the following months and have adjusted their rules based on their feedback.
“We recognize the interest in, and demand for, ETPs and other investment products that hold crypto-assets in Australia,” reads today’s report. “However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly.”
Among ASIC’s numerable ETF requirements is that institutions appoint an expert crypto custodian, ensuring that assets are held safely. Furthermore, each fund will require at least $10 million in net tangible assets to launch.
Should fund managers remain compliant with these rules, they may launch ETPs backed by any approved crypto asset. So far, ASIC has already confirmed that BTC and ETH are acceptable for this. Others are likely to follow and approve on a case-by-case basis by the commission.
“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” said ASIC Commissioner Cathie Armour.
To receive approval as an acceptable underlying cryptocurrency, crypto must have high-level institutional support and adoption. There must also be a regulated futures market for trading the product, alongside a mature spot market.
Steps Ahead of the United States
While the SEC just approved the first Bitcoin ETF last week, this was merely a futures-backed ETF. Contrarily, the ETFs that ASIC is now welcoming may have direct backing from Bitcoin and Ether holdings. Unfortunately, this means that the US has fallen behind Australia and Canada on approving a spot ETF, despite overwhelming demand. Also, they’re behind Europe, too.
Australia’s interest in ETFs involving altcoins also shows more willingness to collaborate with the industry. Alternatively, multiple US officials, including crypto-mom Hester Pierce, have criticized the SEC for being so uncommunicative and unclear on crypto.