Cosmos Removes Cosmos Purpose Bitcoin Access, Cosmos Purpose Ethereum Access, Cosmos Global Digital Miners Access

According to the September disclosure, the Cosmos Purpose Bitcoin Access ETF had about $850,000 in assets under management, the Cosmos Purpose Ethereum Access ETF had about $232,000 and the Cosmos Global Digital Miners Access ETF had about $632,000.

Cosmos declined to comment on the reasons for the delisting, but in a statement Annan said it still had faith in crypto markets and that investors’ assets were protected.

“While we have great faith in the asset class, we are all disappointed by this result,” Annan said. “The ETFs are demarcated by independent external service providers, which are an important transparent risk mitigation structure across all asset classes… We will continue to follow the process in the best interests of all unitholders.”

Sources close to the firm said it had struggled to gain sufficient investor traction to cover the significant costs of running the crypto ETFs, such as the unique and expensive professional indemnity insurance arrangements required.

“It made sense to end”

Cosmos was owned by Nasdaq-listed Mawson Infrastructure, but the Australian-born bitcoin miner wrote down the value of its local fund management venture in August. In a filing with the US Securities and Exchange Commission, Mawson revealed that it had incurred a $1.1 million impairment charge related to its Cosmos subsidiary in the six months to June 30, 2022.

It is understood Mawson later transferred ownership of the asset, which was no longer material, to a third party.

Mawson CEO James Manning said the decision to sell Cosmos was motivated by a desire to refocus on its core bitcoin mining and infrastructure business. “We recognize that ETFs are a business of scale and a long game,” Manning said Australian Financial Review. “We didn’t want to be in the long game and it made sense for us to finish.”

Annan declined to comment on the transaction.

Mawson operates bitcoin mining facilities in Texas, Georgia and Pennsylvania in the US, as well as the far north coast of NSW. It listed on the Nasdaq in September 2021 at $11.50 per share, but has since fallen to 44¢ as it and others await the downturn in the crypto market. The share was among the portfolio holdings of Cosmos’ DIGA fund.

Meanwhile, the corporate regulator has increased its scrutiny of crypto funds marketed to retail investors. Earlier this month, investment manager Holon’s three crypto funds were suspended from raising new assets for 21 days because their target market regulations were incomplete.

ASX funds await

Early investors in Cosmos’ bitcoin and ethereum ETFs lost money, but a strong US dollar has helped as the investment is unhedged in currency.

Cosmos’ bitcoin ETF is down 25 percent since its May 12 inception date, while the ethereum ETF is down 9 percent, compared with an 18 percent decline in the underlying ethereum asset in US dollars.

The Australian Securities Exchange has received applications from potential issuers, but has so far not admitted any cryptocurrency-backed ETFs.

Global X’s local bitcoin and ethereum ETFs have amassed about $8.7 million in assets, according to recent disclosures. Canadian firm 3iQ Digital Management also listed two crypto-backed funds, but has raised less than $350,000, according to disclosures.

The largest of the crypto-related exchange-traded funds is Betashare’s Crypto Innovators ETF, which broke fundraising records with its launch last November. But that fund has fallen 75 percent with assets under management now around $61 million.

Cboe Australia declined to comment.