Fund managers looking to launch exchange-traded funds (ETFs) with underlying crypto assets will soon be able to do so, after the Australian Securities and Investments Commission (ASIC) offered an early green light to products that include bitcoin and Ethereum.
After months of industry consultation, the corporate regulator on Friday issued its response to the use of “crypto assets as underlying assets for exchange-traded products”, or “ETPs”, along with new guidance for the space, which details a raft of regulatory requirements for the funds eager to offer ETFs with underlying crypto assets.
“We recognise the interest in, and demand for, ETPs and other investment products that hold crypto-assets in Australia,” ASIC wrote in a statement on Friday.
“However, we are also aware of the real risk of harm to consumers and markets if these products are not developed and operated properly.”
One requirement is that fund managers will need to appoint a custodial crypto expert, who will be “required to ensure crypto-assets are held in safe and secure custody”.
Funds will also need to front a minimum of $10 million in net tangible assets to launch a crypto ETF, and adhere to other pricing, disclosure and risk management obligations.
Despite the suite of new requirements, the regulator said it will still take a case-by-case approach to licensing cryptocurrencies for listing. So far, only Bitcoin and Ethereum have been approved, though others aren’t expected to be far behind.
“We proposed this because we recognise that crypto-assets vary greatly in their features, characteristics, risks and how they operate, and we consider that only some may be appropriate to be held by a registered managed investment scheme,” ASIC said.
ASIC Commissioner Cathie Armour said these new guardrails were necessary to mitigate some of the risks that come with products like these.
“Crypto-assets have unique characteristics and risks that must be considered by product issuers and market operators in meeting their existing regulatory obligations,” Armour said.
“The good practices we published provide practical examples of how these obligations may be met, in a way that maintains investor protections and Australia’s fair, orderly and transparent markets.”
The announcement follows a whirlwind week for fund managers looking to launch crypto ETF bids of their own.
BetaShares on Friday became the first fund to launch a crypto-focused ETF, using the ticker ‘CRYP’ on the Australian Stock Exchange, which is set to debut on Thursday next week.
It is understood by Business Insider Australia that BetaShares is working to launch a Bitcoin ETF later this year. The fund did not immediately respond to a request for comment.
Less than 24 hours before BetaShares announced its ASX listing, Cosmos Asset Management launched Australia’s first crypto-focused ETF, Cosmos Global Digital Miners Access ETF (DIGA), on the ASX’s biggest rival, Chi-X.
Cosmos chief executive Dan Annan welcomed the regulator’s announcement, and told Business Insider Australia that the firm has been working closely with regulators to get an agreement over the line.
“Cosmos Asset Management has been at the forefront of launching a Bitcoin ETF,” Annan said. “We have led the way with working closely with regulators and exchanges to deliver such a product.”
“Cosmos yesterday listed the closest exposure to Bitcoin, through our global digital miners ETF DIGA, which is already proving to be very popular in the Australian market.”
Cosmos itself is owned by Australian Bitcoin mining group Mawson Infrastructure Group, which earlier this week announced plans to open Australia’s largest Bitcoin mine in Byron Bay, powered solely by renewable energy.
This article originally appeared on Business Insider Australia.