AUSTRALIA Approves first BITCOIN SPOT ETF.

[fillippone]

Australia’s first Bitcoin ETF is given the green light for next week

The listing of Australia’s first Bitcoin (BTC) exchange-traded fund (ETF) on the Cboe equities trading platform will take place next week, serving as the country’s first major test of widespread customer demand for cryptocurrency.

After a sufficient number of market players agreed to stringent margin restrictions, the clearing house that controls access to the country’s equities capital markets will grant the green light for the country’s first Bitcoin ETF, according to a report by the Australian news outlet AFR.

ASX Clear, a powerful clearing house at the heart of Australia’s equity capital markets, now has four market participants willing to put their money where their mouth is and meet the stringent margin requirements required to cover the settlement risks associated with Bitcoin.

Cosmos is an obscure money manager in Australia, running a few tiny funds. They got the authorisation to run a potentially disruptive Spot bitcoin funds. Apparently, this didn't scare Australian regulators.


According to this Bitcoin Magazine article, the fund itself it is only a "wrapping" of Canada's puropuse Bitcoin ETF.

FIRST BITCOIN ETF ON AUSTRALIA’S ASX TO LIST NEXT WEEK: REPORT

Cosmos Asset Management’s product would invest in Canada’s Purpose Bitcoin ETF, North America’s first bitcoin spot ETF that went live last year.

Wow, this is going to be another BITO's Like Frankenstein monstrosity: Cosmos ETF is going to buy Purpouse Shares, repack them for Australian Investors, and sell on local markets, pocketing up a fee, presumedly. So, once again, an inferior investment when compared to the original.

I will update this OP as soon as more information flows.

Eric Balchunas beautifully puts it as follows:

 

In the meantime, the SEC is protecting US investors by delaying a spot ETF approval beyond even possible, forcing US persons to invest in defective products like the monstrous bit, exposing them to the inferior regulatory, economic, and logical framework.

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[Lucius]

I can't say how important Australia is in the whole Bitcoin story, but I'm sure it will play its part in the way when physically-based BTC ETFs will become quite normal in all important countries of the world. If such a product is approved in Canada, and now in Australia, it is only a matter of time before it becomes available in the UK and US - which are quite cautious when it comes to such a thing.

I think the SEC is currently in the phase of monitoring what is happening with futures-based ETFs, and that it is just waiting for the right moment to approve what everyone is waiting for. Although if we take into account what the SEC always emphasizes as the main reasons for rejection, it is not realistic for such an instrument to ever be approved - unless they redesign Bitcoin not to be volatile, 100% transparent and no one can use it for bad purposes.

Speaking of Australia, something interesting happened there in 2003, so for some, this may be a good sign

The first gold ETF launched was Gold Bullion Securities, which listed 28 March 2003 on the Australian Securities Exchange, by ETF Securities and its major shareholder, Graham Tuckwell.

[fillippone]

Still, this is not a “real” Spot ETF, but only something closely similar to it, only with some added cost.
Hopefully, this will increase pressure on SEC on a spot ETF approval, or at least a spot ETF repacking like this one: something that is not allowed to sell in the US.

[Hydrogen]

ETFs are superior to mutual funds in terms of their tax saving benefits.

ETF tax savings are the main reason the winklevoss twins petitioned the SEC to legalize a crypto based ETF in the united states for many years.

It is surprising to see australia legalize a crypto ETF as politically they lean in the direction opposite from most crypto friendly states. I would guess this is a strategic move by australia to attract whales and capital inside their borders. But the spirit and personality of australia's government is more anti crypto, than the opposite.

[fillippone]

But the spirit and personality of australia government is more anti crypto, than the opposite.

So, even if an anti-crypto government is smart enough to let its investors get exposure to a bitcoin spot ETF, if I were a US investor I would be so angry at SEC for leaving me behind on this.
Maybe Barry Silbert is right, the only way is to sue.

[Leviathan.007]

After the opening of the first bitcoin ETF in the world and interest shown by the people to invest there and the interest shown by the governments to have bitcoin trading and investing by using the ETF where they can clearly have some more control over the money invested by people due to the centralizations, the other nations and countries were watching the effect and they were checking for good or bad effects of bitcoin ETFs, so I was always expecting to see more countries and governments are approving it here Australia is one of them.

[fillippone]

Rumours were true after all: two new ETF just got approved in Australia: this time we are talking about true Spot Bitcoin ETF, not just “wrappers”.

Australia Crypto ETF Market Heats Up With Two More Spot Funds Set to Launch

21Shares, which has $2.5 billion in assets under management with 30 global exchange-traded products, has partnered with ETF Securities to launch a bitcoin (BTC) ETF and an ether (ETH) ETF, the company said in a statement Tuesday.

So, all in all, in Australia we have one Spot ETF and an half!

[Lucius]

Rumours were true after all: two new ETF just got approved in Australia: this time we are talking about true Spot Bitcoin ETF, not just “wrappers”.

Who would have thought that things would develop like this in Australia, which I personally, from everything I could read, did not perceive as a country that is particularly friendly to Bitcoin. From an article in the OP, their SEC made it clear two years ago that it does not approve such ETFs, and now we have approvals for physical-based ETFs that we know are completely different if we consider that funds will have to buy Bitcoin and keep it in custodial cold wallets.

I'm really interested in how much investors will be interested in this service, or they will prefer futures-based ETFs or maybe direct investment in Bitcoin. In any case, it will be interesting to see if this news will have an impact on the price.

[fillippone]

I'm really interested in how much investors will be interested in this service, or they will prefer futures-based ETFs or maybe direct investment in Bitcoin. In any case, it will be interesting to see if this news will have an impact on the price.

Rest assured I will be closely monitoring this.
Some sharp-eyed commenters already linked the tightening of the Grayscale discount to the fact that all those ETFs are “adding pressure” to the SEC for a spot ETF in the US, which would be massive, as the US market is estimated to be a couple of orders of magnitude more prominent than the Australian one.

[Agbe]

It is a welcome development to the bitcoin space.
 Australia has shown good example to the whole world. All those countries that were and are planning to ban bitcoin will regret later. The truth is that if any country what to develop economically the country government should adopt Bitcoin to be used. Now that Australia has approved Bitcoin spot ETF, will they die? Or will their economy collapse? Those Countries that adopt Bitcoin to be used in their Countries have seen the potential uses of the currency to their fiat currencies.

This will encourage other countries to see the important of Bitcoin. And one thing I also discovered is that, most Countries are waiting for others to adopt first before they SPOT it.

Since they have adopted bitcoin, the SEC will be in pressure to implement the currency.

[fillippone]

Since they have adopted bitcoin, the SEC will be in pressure to implement the currency.

This is for sure the main aspect of the story. As more and more ETP with spot bitcoins get approved, this imposes more and more pressure on the SEC to finally approve a Spot Bitcoin ETF also in the US, if only to avoid all the customers flocking to a foreign alternative instead of having full support, protection and guidance from local authorities.

[yhiaali3]

The Bitcoin ETF experience in Australia will be the first of its kind in the country so it is expected that it will be a new and exciting experience and perhaps will encourage more countries to do the same. Australia is not a big player in the international money market or crypto but it is definitely an important step for Bitcoin to be There is a legally approved platform for this type of trading that may attract more investors to Australia and this will definitely help in the recovery of the Australian economy due to the influx of new capital into the country.

[Lucius]

Rest assured I will be closely monitoring this.
Some sharp-eyed commenters already linked the tightening of the Grayscale discount to the fact that all those ETFs are “adding pressure” to the SEC for a spot ETF in the US, which would be massive, as the US market is estimated to be a couple of orders of magnitude more prominent than the Australian one.

I may be wrong, but it seems to me that the SEC (US) will be the last to relent, and that we could wait at least another 1-2 years for them to finally approve such an ETF. Although it is about 2 years until the next halving, it might be ideal for these two events to coincide, which would certainly cause perhaps the biggest bull run we have seen so far.

It seems that the crypto market has not yet reacted to this news, but that does not surprise me considering that most ordinary investors do not distinguish between physically-based and futures-based ETFs.

[fillippone]

Bad news from Downunder:  according to bitcoin magazine, there is a problem with a “powerful prime broker”.

This is going to delay the start of trading of every Spot Bitcoin ETF that were authorised in the past weeks in Australia.

AUSTRALIAN BITCOIN SPOT ETF LAUNCH IS DELAYED

• The first Australian bitcoin spot ETF from Cosmos Asset Management has been delayed.
• The delay comes as a surprise since the national clearing house and corporate regulator had previously greenlit the product.
• AFR reports that an unknown “prime” or “executing” broker is behind the delay.

I might also be overspeculating, but this might be tied to the flash dump in btc price we have seen on the same timeframe.

[Lucius]

I might also be overspeculating, but this might be tied to the flash dump in btc price we have seen on the same timeframe.

Does this have anything to do with how the ETF spot works given that the fund has to buy Bitcoin? Is it possible that the funds are trying to influence the price of BTC in some way to buy cheaper, or is it just a classic human incompetence?

The last part of the article is not very clear to me, maybe you can explain exactly what it is about?

However, sources close to Cosmos reportedly stated they were hopeful the strategy of buying units from the existing Purpose Bitcoin ETF listed on the Toronto Stock Exchange, rather than actual bitcoin, might be more appealing to the prime broker which would allow them to list before its competitors.

[fillippone]

I might also be overspeculating, but this might be tied to the flash dump in btc price we have seen on the same timeframe.

Does this have anything to do with how the ETF spot works given that the fund has to buy Bitcoin? Is it possible that the funds are trying to influence the price of BTC in some way to buy cheaper, or is it just a classic human incompetence?

No.
The fund buys bitcoin (not 100% correct, but let's forget this for a minute) with the funds the buyer of the fund used to buy the fund's shares in the first place.
So the fund is only a "passive actor". He has nothing to gain from buying at lower levels, nor uses his own funds to buy the bitcoins.
Everything is explained here:
Everything you wanted to know about a future Based ETF and were afraid to ask
Where I explain how shares are created.

However, sources close to Cosmos reportedly stated they were hopeful the strategy of buying units from the existing Purpose Bitcoin ETF listed on the Toronto Stock Exchange, rather than actual bitcoin, might be more appealing to the prime broker which would allow them to list before its competitors.

As far as I read, some prime broker is probably "scared" of letting their clients trade something with a "bitcoin" label attached. Believe or not, this thing has happened also in Europe. A regular product, like a future, a fund, or an ETF is absolutely normal, even if there is a "bitcoin" label attached to this. But some prime brokers, or the subjects that allow retail banks to access larger markets, often refuse to trade those products because of...reasons.

Here Cosmos is speculating that, as their product doesn't contain bitcoins, but shares of another fund that contains bitcoins, the prime brokers should be more willing to trade their products instead of the others, that contains the real bitcoins.

I am not so sure this is a statement that I can share, but it makes perfect sense from a marketing point of view, given the immense hedge the first-comer has toward the incumbent.

[Lucius]

No.
The fund buys bitcoin (not 100% correct, but let's forget this for a minute) with the funds the buyer of the fund used to buy the fund's shares in the first place.
So the fund is only a "passive actor". He has nothing to gain from buying at lower levels, nor uses his own funds to buy the bitcoins.

Thanks for the explanation, I was in doubt whether the fund first buys Bitcoin and then sells shares in the fund, but the latter of course makes a lot more sense because the fund buys with clients' money.

As far as I read, some prime broker is probably "scared" of letting their clients trade something with a "bitcoin" label attached.
~snip~

I'm not familiar with situations like this, and I was convinced that this ETF would start working today - but it's good to know that things like this can happen. It remains to be seen how long it will take to sort things out and what is the solution in such situations, finding a new prime broker or convincing an existing one to change his mind, something else?

[fillippone]

Thanks for the explanation, I was in doubt whether the fund first buys Bitcoin and then sells shares in the fund, but the latter of course makes a lot more sense because the fund buys with clients' money.

Yes, the fund wants to be as hedged as possible. Buying the bitcoins first exposes the funds to bitcoin price fluctuation before the shares are actually sold.

[stompix]

The fund buys bitcoin with the funds the buyer of the fund used to buy the fund's shares in the first place.

You did this on purpose, right?! 
Moving from haikus to tongue twisters?

However, sources close to Cosmos reportedly stated they were hopeful the strategy of buying units from the existing Purpose Bitcoin ETF listed on the Toronto Stock Exchange, rather than actual bitcoin, might be more appealing to the prime broker which would allow them to list before its competitors.

I've never thought I was going to replace the obvious question "Why not buy BTC directly" with "Why not buy the BTC denominated stocks in the first place"?
Total clueless noob here but are they actually allowed to do this, and treat it as BTC for their clients when in fact it's another investment fund?

I might also be overspeculating, but this might be tied to the flash dump in btc price we have seen on the same timeframe.

Doubt it, it was probably more the scare from the stock markets, lately every single bad news from there starts to reflect in BTC price too and on top of that if you have this sort of article even on Coindesk, 3 Signals a Crypto Crash May Be Coming, According to Experts, from "professional traders and market analysts" it was expected.
Btw, I'm full panda again! 

[fillippone]

The fund buys bitcoin with the funds the buyer of the fund used to buy the fund's shares in the first place.

You did this on purpose, right?!  
Moving from haikus to tongue twisters?

My bad, my English is broken. I will rephrase.

The ETF buys bitcoin with the money provided by the investor in the fund's shares in the first place.

I am doing all this trough a mobile screen. But soon, when EpochTalk is out in production, I will be able to better edit the messages!