Could super funds hold Bitcoin?

As a Kiwisaver fund introduces a weighting Bitcoin, could it be an option for Australian super funds?

In March, NZ Funds Management introduced a weighting of 5% to Bitcoin to its Kiwisaver Growth fund and chief investment officer, James Grigor, said it would be likely to feature in more schemes in the next five years. Meanwhile, in Australia, Raiz Invest had launched a retail fund holding Bitcoin.

The price of Bitcoin was currently $44,000 and had risen 238% in the past year.

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Byron Goldberg, country manager for Luno Australia, a cryptocurrency platform, said he did not believe there was any regulatory reason for super funds to exclude cryptocurrency, although it was the subject on an ongoing consultation by the Australian Securities and Investments Commission (ASIC).

Goldberg said if more exchange traded funds (ETFs) started investing in cryptocurrency then it would be likely super funds would end up holding underlying exposure to it.

“Regulated ETFs will give investment managers the opportunity to buy at an institutional level, retail investors easy access to crypto via traditional equity platforms, and potentially have these ETFs included in broader funds and indexes as a standard part of an investor’s portfolio mix. Overnight, Bitcoin can become an everyday asset in a Super’s portfolio.”

He said once the ETFs were launched, it would be far easier for investment managers to access it rather than having to go via an exchange. Last month, Monochrome Asset Management announced it had plans to launch Australia’s first cryptocurrency ETF.

“It is just a case of how long it takes, the second the first ETF is launched then accessing cryptocurrency will become that much easier. In 10 to 15 years, the people working in the industry will all be crypto natives and will be questioning why products haven’t holding crypto,” Goldberg added.

However, he said he was surprised by ASICs decision to regulate the products before regulating the cryptocurrency itself.

“Crypto-assets need to be regulated on their own – they’re unique, they aren’t going anywhere, and one thing that is certain is that they will continue to evolve. Our current law isn’t iterative enough to evolve with them, so we need new laws, regulations and licences created specifically for our industry and for this new type of asset class.”




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