Australia's first bitcoin ETF could attract $1 billion after launch next week

Financial regulators have approved Australia’s first bitcoin ETF to start trading on April 27, with the Australian Financial Review (AFR) reporting that the ETF could see inflows of up to $1 billion.

An ETF is a regulated exchange-traded fund that allows investors to benefit from the price of bitcoin without owning any bitcoins directly.

Cosmos Asset Management has beaten out local competitors VanEck, BetaShares and EFT Securities to launch Australia's first bitcoin ETF. The companies have been fighting for regulatory approval since at least March, the Sydney Morning Herald reported.

The Cosmos Asset Management Bitcoin ETF will be listed on CBOE Australia following approval from ASX Clear, the capital markets clearing house. According to an AFR article on April 19, the fund was approved after Cosmos secured at least 4 market participants to support the 42% margin requirement.

The Cosmos Bitcoin ETF provides indirect exposure to Bitcoin spot investments through Canada's Purpose Bitcoin ETF.

Kurt Grumelart, a trader at Australian wealth manager Zerocap, called the news of the ETF’s approval “exciting,” commenting that it “validates the ETF’s further institutional adoption". Launched in November 2021, the Betashares CRYP fund saw net inflows of $10 million in the first 10 minutes of listing.

Grumelart expects the same success for the new bitcoin ETF.

"This incident marks a huge step forward in mainstream acceptance in Australia and across the crypto industry."

Grumelart predicts that the ETF's successful launch will attract more participants. He said: “If the overseas market is any indication, the successful launch of this ETF could lead to the listing of a large number of funds based on other crypto assets.”

This will be the second cryptocurrency-related ETF launched by Cosmos since it launched its Global Digital Miners Access ETF last year.

Over the past year, Australian regulators have struggled to create clear rules for the crypto industry. The Australian Securities and Investments Commission (ASIC) wants more powers to regulate the industry, but the country's Senator Andrew Bragg doesn't think that's appropriate until cryptocurrencies are recognized as financial assets under Australian law.

Grumelart said he thought clarifying the rules would help the industry grow.

“With ASIC introducing new regulations governing crypto assets, we expect greater transparency for local custodians and service providers, which will be a pathway in the coming year.”

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