ASIC open to a bitcoin-linked ETF listing on the ASX

Cosmos is now planning to list its bitcoin ETF on the ASX, which has not approved the listing of any bitcoin-related companies or products before. But it is now more open to doing so, as interest in cryptocurrency from professional investors and mainstream payments players surge. After Tesla invested $US1.5 billion ($1.9 billion) in bitcoin this week, Mastercard said on Friday it would accept bitcoin on its network. Iris Energy also indicated this week it is planning an ASX IPO for a mining operation after small cap funds backed a $25 million raising.

James Manning, one of the founders of Cosmos Capital: “[ASIC] have indicated their policy will not allow the product to come to market.” Jessica Hromas

“We have taken a cautious view in the past to this. That is changing to a degree: we are looking at it,” ASX CEO Dominic Stevens told The Australian Financial Review this week. “The world of bitcoin has changed since the last run, and my gut feel is this dominated by more corporate activity and institutions.”

Australia was a pioneer in bitcoin regulation when it brought exchanges under AUSTRAC’s remit in 2018. Now lawyers are calling for ASIC to sharpen its guidance around non-bitcoin crypto offerings. They say its position in Information Sheet 225 is grayer than the UK Financial Conduct Authority, which has set out a clear “regulatory perimeter” to clarify when crypto assets will fall within its regulatory remit.

The Reserve Bank said this week that government should be thinking about creating a regulatory regime for “stablecoins”, which refer to private digital currencies backed by a fiat currency, like the one being set up by Facebook, known as Diem, that will allow money to be transferred seamlessly across the internet.

ASIC’s Cathie Armour:“These products can be made available to Australian through managed investment scheme regime.” 

“While crypto-assets and stablecoins do not currently play a significant role in the Australian payments system, it will be important that they are considered as part of any changes to the regulatory framework,” RBA told Treasury in a submission to its payments system review published this week. “This area is developing rapidly and there may be a lack of clarity about how these arrangements fit within the broader regulatory framework.”

RBA deputy head of payments policy Chris Thompson said on Friday the bank will report in the first half of the year on its wholesale digital currency trials with Commonwealth Bank and National Australia Bank, which could create tokens representing claims on the RBA for banks to exchange with each other. But some are calling for the RBA to prepare for issuing a digital version of RBA banknotes into the retail market.

Joni Pirovich, special counsel at law firm Mills Oakley, told the committee on Thursday that a central bank digital currency could facilitate “programmable money”, which would allow government to speed up and monitor stimulus payments. A growing number of central banks, including Canada’s, are preparing for a retail central bank digital currency.

Committee chairman, Liberal senator Andrew Bragg, indicated a final report in April would make recommendations in the area. “In the digital asset space, clearly there is the need for us to do some thinking about what our approach is going to be,” he said.

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