Analytics

Australian Crypto ETFs will see huge inflows says Analyst

Sui Chung, CEO of CF Benchmarks told Insider Australia that she was very bullish on money flowing into crypto ETFs in the near future. 

Crypto ETFs have come to stay

There has been no shortage of good news for crypto ETFs in Australia over the last few weeks. Not only has the ASIC released guidelines on crypto ETPs, but the Bitcoin ETF released was the fastest-growing in history. With Australian funds looking to launch more Bitcoin ETFs, analysts and industry professionals have taken note of the growth happening before their eyes. 

One of them is Sui Chung, CEO of CF Benchmarks, a digital asset trading platform. She noted that inflow into crypto ETFs was probably only going to increase from here on and every month would see another $50 million to $100 million going into crypto ETFs. As this number balloons pretty quickly, it’s easy to see where this is going rather soon: institutional adoption.

Enter institutional investors

Chung noted that Australia’s pension funds would probably become interested once the market was big enough for them to get in. Gradual allocations by pension funds would lift crypto ETFs and drive valuations up ever further. With Australia having one of the “most successful pensions markets” with total estimated assets of over $2 billion, this would result in yet another leg up for crypto prices and further penetration of the mainstream financial markets. 

The Australian Securities and Investments Commission (ASIC) is aware of the interest and demand for the sector but also warns of potential risks ahead. So do some of the people working at the forefront of institutional adoption of cryptocurrencies. BetaShares CEO Alex Vynokur noted that crypto ETFs are “very high risk” and stressed that diversification was of utmost importance when investing in digital assets. That is a quite frank statement coming from the chief executive of the fund that had launched the first-ever Bitcoin ETF. 

U.S. still holding off on a Bitcoin spot ETF

While institutional adoption and futures ETFs are chugging along nicely, a Bitcoin spot ETF is still off-limits for now. After the SEC denied an ETF application, Congressmen Tom Emmer and Darren Soto wrote a bipartisan letter to its chairman Gary Gensler. In the letter, they questioned the disapproval in light of already having approved two futures ETFs, but Gensler has been pretty clear on his expectations of a spot ETF. The SEC’s Commissioner, Hester Peirce, underscored that Gensler would like to see stronger regulation and that a spot ETF would be very much on the cards if cryptocurrencies were to be regulated more.

That, of course, clashes with the understanding that most crypto investors and proponents have of crypto assets, seeing them as a way of escaping the overreaching arm of financial regulators and watchdogs. How those two perceptions can be reconciled is unclear. Still, crypto ETF adoption in the U.S. and Australia continues and approval of a Bitcoin spot ETF in a market like Australia might be the signal the SEC needs to soften its stance on a US-traded ETF.

   

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