ASIC Cleans Up the Crypto Act: New Guidelines for Exchange-Traded Products

Setting the Stage for Crypto ETPs

The Australia Securities and Investments Commission (ASIC) is putting on its regulatory hat and striding out onto the dance floor of cryptocurrency exchange-traded products (ETPs). After a few months of public consultation—because who doesn’t love a good debate about the future of money?—ASIC has unveiled its shiny new set of rules for crypto funds aiming to offer these digital assets as part of their portfolio.

Green Light for Major Players

As of October 2021, ASIC has given a thumbs-up to ETPs based on some of the big-name cryptocurrencies like Bitcoin (BTC) and Ether (ETH). These digital currencies have apparently ticked all the right boxes when it comes to becoming an acceptable foundation for future ETPs. But don’t get too excited—just because you have Bitcoin doesn’t mean you can waltz into ETP paradise. The guidance states that these crypto-assets need to meet a set of standard requirements, including:

• High institutional support
• A mature spot market
• A regulated futures market
• Reputable service providers
• Transparent pricing mechanisms

Licenses and Obligations: The Fine Print

Now, if you’re thinking of becoming an issuer of crypto ETFs, you’d better be ready to show you can handle the responsibilities that come with it. Licensed exchanges must check everything from custody safety to licensing obligations before giving the green flag to any product. There’s no room for sloppy management here!

No Domestic Crypto Custody? No Problem!

In a surprising twist, ASIC has decided not to enforce a domestic custody requirement for entities issuing crypto ETFs. That means your assets can be resting comfortably in overseas jurisdictions without anyone batting an eye. ASIC acknowledges there are concerns—like trying to reclaim your assets across borders can be a logistical nightmare—but they believe mandating a local custodian would hamstring fair competition.

Fresh Faces in Crypto ETFs

Just as ASIC rolls out these guidelines, the crypto world is buzzing with activity. For example, Cosmos Asset Management has kicked off its mining-linked ETF on Chi-X Australia, now trading under the ticker DIGA. But wait, there’s more! Aussie ETF provider BetaShares is gearing up to launch its own crypto ETF tied to companies in the industry, set to start trading as CRYP next week. Looks like the Australian market is keen on making waves in the crypto sea!