Competitors are steadfast even as two Australian crypto ETF providers bail
Two digital asset exchange-traded fund (ETF) issuers in Australia are set to exit the market amid increased scrutiny by regulators and a deepening crypto winter, even as some remain bullish on the market’s outlook.
In the past week, Australian crypto ETF providers including Holon Investments and Cosmos Asset Management have indicated they may step back from the crypto ETF scene.
On November 6, Holon said it may close its three retail crypto funds following a crackdown by the Australian financial regulator, which has accused the fund of failing to “describe the risks to investors in its target market provisions”, according to a report by the Australian Financial Review (AFR ).
It comes after the Australian Securities and Investments Commission (ASIC) issued a temporary stop order on October 17 targeting Holon’s three funds due to non-compliant target market regulations (TMDs).
The AFR report notes that Holon has argued that the crypto funds were designed to be part of a diversified portfolio, not the bulk of an investment strategy, although that may have fallen on deaf ears.
Another crypto ETF issuer Cosmos is also jumping off the bandwagon with last week’s announcement that it will delist its crypto ETFs from the Cboe Australia exchange.
According to the report, sources stated that Cosmos was unable to attract sufficient assets under management to remain viable. It also had large fixed costs in crypto custody and professional indemnity insurance costs.
According to public disclosures in September, Cosmos had about $1.6 million in AUM for its combined BTC and ETH funds.
Related: Three crypto ETFs to delist in Australia as crypto winter continues
However, some crypto ETF providers appear to remain committed to the market, which is expected to see one million new crypto adopters in the next 12 months, according to a recent survey by crypto exchange Swyftx.
Providers currently involved in the Australian crypto ETF market include 3iQ Digital Asset Management, Monochrome Asset Management and Global X Australia, formerly known as ETF Securities.
Global X Australia CEO Evan Metcalf told the AFR that the firm continues to have a “strong belief in digital assets and has no plans to close any crypto ETPs,” noting:
“We are very bullish on the crypto markets in general, digital assets and decentralized finance – we see huge potential there.”
However, Metcalf noted that the funds had experienced a “relatively calm” reception from investors amid the current market downturn, while there was a “reluctance” from local stockbrokers to give clients access to the funds.
