- A huge pool of money could be about to juice crypto markets, according to a digital-asset ETF expert.
- CF Benchmarks’ Sui Chung said Australia’s decision to allow crypto ETFs could be a major moment for digital assets.
- Australia’s pension system is one of the world’s biggest and could soon be investing in bitcoin or ether ETFs.
Cryptocurrency prices are at record highs, but there could be more bullish news on the way for digital-asset investors.
The move is a “very, very exciting” development for the world of digital assets, according to Sui Chung, CEO of CF Benchmarks, a financial data company. CF Benchmarks’ data underpins CME Group’s crypto futures and is used by many crypto exchange-traded products.
Chung told Insider Australia giving the go-ahead to crypto ETFs could be a huge milestone, because it gives the country’s enormous and fast-growing pension system exposure to this market.
Australia has the fifth-biggest pool of pension assets in the world, at $2.33 trillion, according to a report by insurance giant Willis Tower Watson. The pool is also growing rapidly because of Australia’s compulsory contribution system, which mandates relatively high payments.
Willis Towers Watson deemed Australia’s pension market the most successful in the world, “featuring 20-year pension asset growth of 11.3% per annum, in USD terms.” It also found Australian pension funds had some of the highest allocation to shares, which shows a willingness to take risk.
Chung said gradual allocations to crypto ETFs by pension funds could be a big boost for the market.
“What you’re going to see is literally every month, another $50 million or $100 million will go into crypto ETFs,” he said. “It doesn’t take very long before that becomes a pretty big number.”
There are already signs of interest in crypto from Australia’s pension market. Queensland Investment Corporation, which manages $69 billion of assets, told the Financial Times it is open to the idea of getting into cryptocurrencies.
Australia’s financial regulator released a set of guidelines for crypto exchange-traded products at the end of October, which emphasize security. The guidelines will allow funds to offer ETFs that invest in underlying cryptocurrencies.
An exchange-traded fund is a type of security that trades on an exchange – letting investors buy and sell shares – and tracks the performance of an asset, or group of assets.
The US has allowed bitcoin futures ETF to launch but is yet to decide on whether to allow a fund based on bitcoin itself.
Nonetheless, the launches have generated a huge buzz in the crypto world, as they allow investors in the world’s biggest economy an easy way to gain exposure to bitcoin.
Cryptocurrencies such as bitcoin and ether soared to record highs on Tuesday, as excitement continued to build around the sector. Bitcoin was last up 1% to $66,724 on the Bitstamp exchange, while ether was flat at $4,784.