Better late than never: Cboe confirms cryptocurrency ETF delay

The funds were scheduled to list on Wednesday, and would have been the first ETF products to offer direct access to bitcoin.

A man poses in a Bitcoin-themed art installation during a conference in Miami this month. Cryptocurrency ETFs want to offer investors the chance to directly invest in bitcoin without the need for a digital wallet. Picture: AFP

Cboe Australia has confirmed that three cryptocurrency ETFs – the first to offer investors direct access to the asset class – will not list as scheduled on Wednesday.

As The Australian reported on Monday, two ETF Securities-run products – the 21Shares Bitcoin ETF and the 21Shares Ethereum ETF – had already flagged that there would be a delay to their float on the exchange, previously known as Chi-X.

The ETF Securities products were competing with a similar offering from Cosmos Asset Management to become the first to publicly list on a market.

In a market circular on Tuesday, Cboe said – in relation to all three ETF products – that “standard checks prior to the commencement of trading are still being completed and accordingly the above funds will not commence trading”. Cboe had declined to comment on a possible delay when contacted on Sunday.

READ MORE:Last-minute delay for ETF Securities cryptocurrency pioneers | Crypto ETFs, some of Australia’s first, to list on Cboe Exchange

At the time, ETF Securities’ head of product Evan Metcalf told The Australian that the company had “become aware late on Friday that a downstream service provider may not be fully ready to support the launch of the bitcoin and ethereum ETFs”.

“The party involved is remote to both ETF Securities and the exchange, but we are assured that work is being done over the long weekend to ensure readiness as soon as possible … This may cause a temporary delay in these products coming to market,” Mr Metcalf said at the time.

While there are cryptocurrency-related ETF products on the market – including BetaShares Crypto Innovators, which provides exposure to companies providing other services to the sector – there are no listed funds allowing direct exposure to the underlying currencies. It is expected that more than $1bn could flow into the first bitcoin ETFs in Australia.

VanEck Australia, BetaShares and several other ETF providers are also working on similar cryptocurrency products.

ETF Securities chairman Graham Tuckwell has previously expressed his unhappiness at the slow pace of approvals from ASX Clear, and warned there would be slower uptake by investors than for other funds because the infrastructure was still not in place.

Cosmos’s bitcoin ETF had been expected to begin trading on April 27 after being given the green light from monopoly clearing services provider ASX Clear – as had ETF Securities products.

A Cosmos spokesman could not be reached on Tuesday.

All bitcoin held by the ETF Securities fund will be held in a secured account owned by Coinbase, which has over $US270bn ($365bn) in assets under custody. They will be held on both “cold storage” accounts – which are taken offline to reduce the possibility of hacking – and “multi signature wallet” accounts, according to the filing.

The prospectus for the ETF Securities products also warns there is the possibility of changes to regulations that may affect the performance of cryptocurrencies.

The Australian Securities & Investments Commission gave a green light to the trading and listing of cryptocurrency-linked ETFs in October. ETF Securities has previously said it still expects to list in coming weeks.