ASIC crypto consultation welcomed

The creators of cryptocurrency fund Monochrome have praised the regulator’s consultation into cryptocurrency strategies as it considers launching a bitcoin exchange traded fund (ETF).

On Wednesday, the Australian Securities and Investments Commission (ASIC) announced it would be seeking feedback on exchange traded products and investment products providing retail investors with exposure to cryptocurrency assets.

The firm launched the Monochrome Bitcoin fund in June which was a wholesale managed investment fund with a 100% allocation to Bitcoin. This gave investors the opportunity to invest in Bitcoin in a traditional format without engaging in digital technologies.

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Jeff Yew, founder of Monochrome, said: “I think this is a very proactive move from ASIC and shows the foresight to acknowledge the demand for regulated digital asset products is growing and here to stay.

“ASIC understands that demand for a digital asset ETF isn’t going away and that it’s time to shift operational and custody risks to professional managers.

“Most of the team and I have been working closely with peers and regulators for years and we are really happy to see things moving in the right direction.”

Its bitcoin fund was currently available to wholesale investors with a minimum of $50,000 but it was considering launching an ETF to widen the available investor base.

“Launching a digital asset ETF not only offers a highly-accessible investment product to more investors but it also shifts the operational and custody risks to professional issuers and managers,” Yew said.

“This lowers the barriers of entry for consumers of the financial product making it a smoother investment.”

ETF provider BetaShares also welcomed the ASIC consultation as being “constructive” but said it felt cryptocurrency products should only be offered by experienced providers as there was a risk of “significant harm” to investors.

“In our view, only those with demonstrable global, institutional-grade capability in crypto-asset custody should be permitted to act as independent custodians of crypto-asset investment products,” it said.

“Similarly, we believe that fund managers who seek to offer such investment products should be required to demonstrate a track record of risk management and organisational competency in managing retail investment products.

“We strongly support the regulator’s focus on ensuring that:

  1. Regulated investment products (such as exchange traded products) are only permitted in respect of a small subset of crypto-assets, that can demonstrate robust liquidity, transparency and price discovery; and
  2. The bar is set high in respect of the ecosystem of service providers.”  

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