Australian Securities and Investments authority issues guidelines for crypto ETPs
The Australia Securities and Investments Commission (ASIC) has recently issued an official response to a public consultation on cryptocurrency exchange-traded products (ETPs) accompanying a fresh industry guidance.
After months of consultation starting from June, on October 29, ASIC has released a set of regulatory requirements for funds that are opting to offer crypto ETPs, including exchange-traded funds (ETFs) and structured products.
As per the official guidance, ASIC has also given a green signal to ETPs that are based on cryptocurrencies like Ether and Bitcoin. It is expected that more crypto assets would become a foundation for ETPs in the near future.
ASIC has said that “a range of non-financial product crypto-assets” that are able to satisfy the factors would be expanded over time.
The guidance report has also suggested that for a proper basis of a crypto ETF, crypto-assets should mandatorily obtain a high level of institutional support, a regulated futures market, a mature spot market, some reputable and experienced service providers, and a series of transparent pricing mechanisms.
As each crypto ETF application is surfaced, licensed exchanges would have to assess whether the issuer can ably fulfil its obligations in relation to the product, including those of providing safe and securing custody in addition to obtaining relevant licenses.
In the response, the ASIC has also said that it does not require any domestic crypto custody for the bodies issuing crypto ETFs, noting that such restrictions would then limit competition in an “unfair” manner.
The document acknowledges all concerns raised by respondents regarding overseas-based custody of crypto assets, like the potential for difficulties to recover assets across cross border jurisdictions, etc. In order to overcome this, ASIC has considered that it would be “inappropriate to mandate a domestic custodian requirement.”
The news has come in a follow-up to the October 28 Australian Cosmos Asset Management’s debut at crypto mining-linked ETF on Chi-X Australia. The Australian hedge funds manager, Cosmos Global Digital Miners Access ETF, had begun trading under the ticker DIGA. It currently tracks several firms like Marathon Digital, Riot Blockchain, Hut 8 Mining, Hive Blockchain Technologies, and others.
BetaShares, the Australian ETF provider, is also reported to be preparing for a crypto ETF launch that is linked to companies like Coinbase and MicroStrategy.
The crypto ETF is expected to start trading next week onwards on the Australian Securities Exchange under the ticker CRYP.
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