VanEck leads charge toward ASX spot Bitcoin ETFs

Leading investment firm VanEck has been pushing for the ASX to allow the trading of spot Bitcoin ETFs since 2021. Following the US Securities and Exchange Commission's (SEC) ruling on spot Bitcoin ETFs and, more recently, their approval in Hong Kong, financial institutions in Australia are increasingly eager for the ASX to follow suit.

Arian Neiron, CEO and managing director of VanEck Asia Pacific, wrote in March, “Since the US SEC ruling, we’ve experienced a significant uptick in queries and requests from the adviser and broker community regarding our submission to ASX to launch a Bitcoin ETF. The demand for access to Bitcoin via a listed vehicle traded on ASX has been increasing and many of our clients have told us that their clients are already positioned to have an allocation ready to invest.”

He continued, “However, contrary to some representations that have recently been made to the media, approval for an ASX-listed Bitcoin ETF is not imminent. There are still a number of hurdles from a regulatory and exchange framework perspective that must be worked through as well as approval from ASIC, before we will see a Bitcoin ETF on ASX.”

VanEck is no stranger to long approval processes. In January, the firm received SEC approval for its VanEck Bitcoin Trust (BATS:HODL) almost six years after initially filing for a spot Bitcoin ETF in the US.

VanEck was the first firm to file an application for a spot Bitcoin ETF on the ASX, and resubmitted paperwork in February. Other prospective issuers include BetaShares Holdings, DigitalX and Monochrome, which filed in July 2023.

Australian pension funds may buy into spot Bitcoin ETFs

Jamie Hannah, deputy head of investments and capital markets for VanEck Australia, believes that Australia’s AU$2.3 trillion self-managed superannuation market, where around a quarter of Australia’s retirement assets are held, could contribute sizeable inflows in the event that spot Bitcoin ETFs are approved.

Indeed, new figures from the Australian Taxation Office provided in March and reported by the Sydney Morning Herald show that self-managed super funds hold 76 percent more crypto assets compared to three years ago. They held virtually no crypto assets just five years ago, highlighting a rapid growth in interest.

“A significant number of crypto investors in Australia want to allocate at least a percentage of their retirement funds to cryptocurrencies,'' said Jason Titman, chief operating officer at Swyftx, a crypto exchange based in Brisbane.

Spot Bitcoin ETFs gain worldwide momentum

Institutional investment in digital assets has increased and is poised to continue as cryptocurrencies become more mainstream. Spot Bitcoin ETFs in particular have become appealing in recent years. Canada was the first country to offer these products in 2021. Exchanges in Brazil and Amsterdam also began trading spot Bitcoin ETFs in 2021. El Salvador went as far as listing Bitcoin as legal tender alongside the US dollar in 2021.

In the US, 10 spot Bitcoin ETFs were approved on January 10 of this year after years of legal battles between regulators and crypto exchanges, with crypto groups and even certain politicians urging the SEC to allow them. Since their approval, US spot Bitcoin ETFs have amassed over US$52 billion in assets under management.

Bitcoin's continued prominence could prompt other nations to explore the possibility of offering more digital assets. Hong Kong recently approved a list of spot Bitcoin and Ether ETFs, allowing them to begin trading on April 30, and analysts and experts are speculating that other Asian countries may soon follow suit.

Karim Saber, a research associate at 21Shares, has suggested that South Korea could be next after the Bitcoin-friendly Democratic Party of Korea’s recent electoral win. One of the party's promises was that it would allow spot Bitcoin ETF trading and, according to sources for Cointelegraph, it will formally request that the Financial Services Commission reconsider its position on their legal status after the opening of the National Assembly in June.

Additionally, a March survey of Singaporeans by Independence Reserve indicates growing investor interest in cryptocurrencies, prompting some analysts to believe that Singapore could eventually allow spot Bitcoin ETFs as well.

The London Stock Exchange is also taking steps in this direction, as it is currently accepting proposals for physically backed Bitcoin- and Ether-related exchange-traded notes, with plans to list securities on May 28.

Investor takeaway

The increasing interest in cryptocurrencies among investors and the recent approval of spot Bitcoin ETFs in other countries suggests that the ASX may soon follow suit. As momentum builds, it will be interesting to see how cryptocurrencies will shape the world of finance in Australia and beyond in the coming years.