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Three new cryptocurrency exchange-traded funds (ETFs) recently began trading in Australia, marking a significant step forward for global crypto adoption. On May 12, 2022, these ETFs began trading on the Cboe Australian stock exchange (CXA).
The historic launch allows Australian investors to gain exposure to certain cryptocurrencies through a traditional avenue like the stock market.
Cboe Australia chief executive Vic Jokovic stated: “EBTC, EETH and CBTC are breakthrough products that will pave the way for more Australians to expose their portfolios to cryptocurrency in a regulated Manner.”
What is a Crypto ETF?
An exchange-traded fund (ETF) is an investment fund that is managed and traded on a stock exchange. ETFs are often considered low risk as they typically track multiple indexes, commodities or assets across a specific sector. Many investors are drawn to ETFs as they can easily build a diversified portfolio and gain exposure within multiple sectors.
One of the most well-known Australian ETFs is IShares Core S&P ASX 200 ETF (ASX: IOZ), which follows the performance of the 200 largest companies listed on the ASX. ETFs can be purchased on any stock exchange including the Australian Securities Exchange (ASX) and Cboe Australia (CXA Stock Exchange).
Similar to traditional ETFs, cryptocurrency ETFs track the price of one or more crypto assets such as Bitcoin and Ethereum. They are traded on a traditional stock exchange rather than a cryptocurrency exchange. Crypto ETFs provide investors with a way to indirectly own Bitcoin, Ethereum and other digital assets in a more tightly regulated environment, without needing to trade through a crypto exchange and store the asset in a crypto wallet.
To find out more about how crypto ETFs work, check out our guide to crypto ETFs on Swyftx Learn.
Australian ETFs go live
The three new crypto ETFs that have launched on Cboe Australia, a popular securities and derivatives exchange, are 21 Shares Bitcoin ETF (EBTC), 21Shares Ethereum ETF (EETH) and the Cosmos Purpose Bitcoin Access ETF (CBTC). The release of these ETFs will give traditional investors more ways to enter the crypto market.
Bitcoin ETF (EBTC)
EBTC was created by 21Shares and is managed in Australia by ETF Securities, the world’s largest issuers of crypto ETFs. EBTC tracks the price and performance of Bitcoin in Australian dollars (AUD). EBTC is fully backed by actual Bitcoins that are held in cold storage by Coinbase. To protect the stored Bitcoin from cyber theft 21 Shares has implemented a security practice known as “sharding”, which breaks private keys into smaller chunks of information
Ethereum ETF (EETH)
EETH is another crypto ETF created by 21Shares. This ETF tracks the price of Ether, the native token on the Ethereum blockchain. Similar to EBTC, EETH is fully back by Ethereum, holding all Ether in cold storage hosted by Coinbase.
The Cosmos Purpose Bitcoin Access ETF (CBTC)
CBTC was created by Cosmos Asset Management, a company that oversees the growth of multiple digital assets and indexed funds. CBTC operates differently from the previously discussed ETFs. This ETF tracks the price of a Canadian-based crypto ETF known as Purpose Bitcoin ETF. This was the first crypto ETF to ever be launched and began publicly trading on the Toronto Stock Exchange (TSX) in February 2021.
Purpose ETF tracks the price of Bitcoin and uses a global network of liquidity providers to continually purchase Bitcoin.
How did they perform on debut?
Unfortunately, the crypto ETFs did not have the explosive debut that many investors were expecting. On their first day of trading, only $1 million in trade volume was garnered by all three ETFs combined. This was likely due to the dive that Bitcoin and many other cryptocurrencies experienced in the days leading up to the launch on the Cboe Australian stock exchange.
Investors are more cautious about investing in cryptocurrency after Stablecoin TerraUSD lost its U.S. Dollar peg, causing the LUNA token, the native token on the Terra network, to crash by almost 99.99%.
How are these ETFs different from CRYP – an existing ETF on the ASX
BetaShares Crypto Innovators ETF (CRYP) launched on the ASX in November 2021. The purpose of CRYP is to provide investors with exposure to public companies at the forefront of the crypto ecosystem.
When first listed, CRYP broke an ETF record, attracting $8 million within 48 hours. Since then, the price has dropped over 75%, which is mostly reflective of the performance of the crypto market.
CRYP invests in some of the largest publicly listed global companies such as Coinbase, Riot Blockchain and MicroStrategy. This is unlike the ETFs launched by 21Shares and Cosmos, which directly track the performance of actual cryptocurrencies like Bitcoin and Ether.
Where can I buy crypto ETFs in Australia
EBTC, EETH and CBTC are all available for trading on Cboe Australia Exchange. These ETFs can be purchased through and Cboe market participants and any Australian online brokerage that supports Cboe.
If you are interested in trading CRYP it can be purchased on the ASX. ETF providers BetaShares and VanEck have also announced plans to launch crypto ETFs on the ASX.
If you are looking for investment solutions tailored to your needs, a full-service broker can provide you with investment advice and buy and sell crypto ETFs on your behalf.
Ted
