ETF Securities chairman Graham Tuckwell blasts the Australian Securities Exchange for delaying allowing bitcoin exchange-traded funds to list on rival Chi-x

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The ASX strongly denied the allegation. A spokesperson for the market operator told the Financial Review: “The product is waiting for enough clearing participants willing to supply the product to their clients to allow it to be viable. While completing this assessment, ASX has engaged extensively with Chi-X and our clearing participants.

Chi-X declined to comment.

Basic “not met” requirement

According to the rules for admitting investment products to the ASX, at least five or six so-called clearing houses (mostly stockbrokers) must be willing to offer the product to their clients. It is understood that only two or three brokers have yet indicated demand for crypto ETFs.

“This is a baseline requirement for central clearing and has not yet been met,” the ASX spokesperson said. “ASX and Chi-X are working with the clearing industry so that this requirement can be met and crypto ETFs are accepted for clearing.”

Besides ETF Securities, a number of fund managers have applied to the ASX or Chi-X to list cryptocurrency-backed funds on their exchanges, including ETF providers VanEck and BetaShares and specialist firms in crypto Cosmos Asset Management and Monochrome Asset Management.

In October, the Australian Securities and Investments Commission gave its approval for crypto ETFs to be listed on regulated exchanges, but said only products that track the price of bitcoin and ether (the digital token tied to the ethereum blockchain) would be accepted, not smaller alt-coins.

A fund manager with knowledge of the crypto ETF race backed the ASX’s response to Mr Tuckwell’s claims. “It’s the brokers who aren’t ready, not the ASX,” the fund manager said.

But exchange industry sources said that while it was true that only a few clearinghouses had so far signed up for crypto ETFs, the ASX could have done more to make that decision easier for them. .

Chicken or egg?

“ASX Clear issued guidance to clearinghouses regarding their liquidity and margin requirements in 2016, but it has not updated those guidelines to reflect this news. [crypto-linked] products,” said a brokerage industry executive. “It’s convenient for the ASX to just blame [the clearing houses], but it’s a chicken or egg type thing.

Mr Tuckwell said it was right for a consultation and due diligence process to take place, but it shouldn’t take seven weeks from application, especially as crypto ETFs are on the rise. agenda for more than six months.

“We have received regulatory approvals, so there should be no more delays or hurdles,” the ETF Securities chairman said.

The frustration is a sign of the increasingly fierce race to list Australia’s first ETF invested directly in crypto assets, for which the industry believes there is strong pent-up demand from retail and institutional investors.

An ETF invested in cryptocurrency-related stocks such as miners and bitcoin exchanges was listed by BetaShares on the ASX in November. It broke the record for first-day ASX ETF trading volumes within 15 minutes of listing.

Crypto-equity funds managed by Cosmos Asset Management and ETF Securities were also listed on Chi-X.

The ASX has previously said it will assess cryptocurrency ETF applications in the order in which they are received. He refused to release the pecking order.

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