Author: Weilin, PANews
On June 20, the Australian Stock Exchange (ASX) listed its first Bitcoin spot ETF, issued by US asset management company VanEck, named VanEck Bitcoin ETF, code VBTC. VanEck's seed investment was about A$985,000 (about US$657,000). Judging from the first day's performance, the ETF's trading volume on the first trading day reached US$1.3 million.
ASX accounts for 90% of the Australian stock market and is the largest stock exchange in the country. The listed VBTC is a feeder fund for the VanEck Bitcoin ETF HODL, which is worth $647 million in the US market. The fund has been registered with the Australian Securities and Investments Commission (ASIC) and is regulated as a "registered managed investment plan." This also marks the final result of more than three years of negotiations between VanEck and Australian regulators. What benefits will the relevant developments bring to the market?
Early approval breaks expectations, VBTC joins the competition
Bloomberg previously reported that the Australian Stock Exchange may approve the first spot Bitcoin ETFs by the end of 2024. Based on the current results, the approval will come earlier than expected.
Previously, ASX's competitor, Australia's CBOE, launched a Bitcoin spot ETF (EBTC) issued by Global X and 21Shares in April 2022. EBTC does not directly hold Bitcoin. In June of this year, CBOE also launched a Bitcoin spot ETF (IBTC) issued by Monochrome Asset Management. Monochrome's CEO Jeff Yew said that IBTC is Australia's first Bitcoin spot ETF that directly holds Bitcoin. As of June 18, EBTC's AUM was A$106 million. As of June 19, IBTC's daily AUM was 54 BTC, equivalent to A$5.36 million.
Meanwhile, an ASX spokesperson said that only VanEck has received approval to list a Bitcoin ETF on the exchange, and applications from other issuers are in progress.
Sydney-based BetaShares Holdings Pty and another local company, DigitalX, are also in the queue for a listing.
Lisa Wade, CEO of DigitalX, said that the company's spot Bitcoin ETF application is progressing smoothly and is working closely with ASX. She added that in addition to Bitcoin, DigitalX may launch an Ethereum ETF on ASX. She said: "Ethereum is very popular. We are just waiting for the support of ASX and ASIC."
Fee competition emerges, VBTC trading volume reaches $1.3 million on the first day
VanEck's product disclosure statement shows that its annual management fee is 0.59%. In comparison, the management fee of Global X Bitcoin ETF is 1.25%. But now, Global X has reduced the fee of its Bitcoin ETF from 1.25% to 0.59%, the same as VanEck's offer. In contrast, the US-listed iShares Bitcoin Trust Fund charges 0.25%.
Competition among exchanges is also ongoing. In April, Brisbane-based Monochrome Asset Management cancelled its pending application to list a bitcoin ETF on the ASX, opting instead to Cboe’s rival Australian Exchange, where the ETF officially launched this month.
On the other hand, VanEck’s application has been in the works for as long as three years. VanEck has been working on bringing a spot Bitcoin ETF to the ASX since early 2021. The investment giant submitted its application to the ASX again in February this year.
Arian Neiron, head of Asia Pacific at VanEck, said: “We have a long and deep tradition in gold investing, so store of value investing is deeply rooted in our genes. We view Bitcoin as a form of digital gold.”
Arian Neiron, Head of VanEck Asia Pacific
In fact, as early as 2022, Australia's CBOE approved the ETF launched by asset management company Cosmos Asset Management. In the same year, Canada-based 3iQ Digital Asset Management launched Bitcoin spot ETF and Ethereum spot ETF in Australia, namely 3iQCoinShares Bitcoin (BTC) Feeder ETF and 3iQ CoinShares Ether Feeder ETF. Both ETFs are registered in Australia and are also "feeder funds", providing investors with investment opportunities in 3iQ CoinShares Bitcoin ETF and 3iQ CoinShares Ether ETF listed on the Toronto Stock Exchange. The underlying assets of these two Canadian ETFs are BTC and ETH cold-stored by the Gemini cryptocurrency exchange.
In addition, 3iQ’s Bitcoin Spot ETF and Ethereum Spot ETF were hosted on Chi-X (now Cboe), Australia’s second-largest market, rather than the ASX, because at the time there were still some regulatory difficulties in listing blockchain and cryptocurrency-related stocks on the ASX.
However, in 2022, all three ETFs were delisted within less than a year due to insufficient demand and poor performance.
As Bitcoin and virtual asset investment products become increasingly popular, there are reports that Australia's $2.3 trillion pension market may promote the inflow of funds into these ETF products. Jamie Hannah, deputy director of investment and capital markets at VanEck Australia, said that about a quarter of the country's pension assets are deposited in self-managed pension plans, which enables individuals to choose investment products on their own. This group of people is likely to become buyers of cryptocurrency spot ETF funds.
Compared with other markets, the U.S. Securities and Exchange Commission approved the listing of the first 11 spot Bitcoin ETFs on January 10, and the daily trading volume reached $1.7 billion as of June 18. Hong Kong also listed six virtual asset ETFs for Bitcoin and Ethereum on April 30, and the daily trading volume of three Bitcoin spot ETFs in Hong Kong reached $3.28 million as of June 19.
Judging from the first-day performance, the ASX's first Bitcoin ETF's first-day trading volume reached $1.3 million. The total trading volume of the first 10 ETFs in the United States reached $4.5 billion, with an average of about $450 million per fund. Although far lower than the first-day performance of the US spot Bitcoin ETF, Australia's interest in Bitcoin ETFs is surging, and a new trend is affecting more markets.
Despite the difference in market size, VanEck is optimistic about the growth prospects of its ETF in Australia, and expects it to have a similar growth trend to the U.S. spot Bitcoin ETF. "Although the Australian market is much smaller than the U.S., and most of our inflows come from retail investors rather than institutional investors, we are likely to follow a similar path," said Jamie Hannah, deputy director of investment and capital markets at VanEck Australia.