COINBASE Global, the largest US crypto exchange, is zeroing in on potential demand in Australia’s growing self-managed pensions sector.
The exchange is developing a service that targets the segment, Asia-Pacific managing director John O’Loghlen said. Such portfolios make up about a quarter of Australia’s US$2.5 trillion pension system and have A$1 billion (S$900 million) allocated to crypto, the latest Australian Taxation Office data show.
Crypto assets held within these self-managed retirement funds may be on track to hit a record after inflows and Bitcoin’s 55 per cent price jump this year. But Australia’s institutional money managers largely shy away from the digital asset sector, given its history of scandal and sometimes intense volatility.
“Self-managed super funds might just make a single allocation and set it and forget it,” O’Loghlen said. “We are working on an offering to service those clients really well on a one-off basis – to have them trade with us and stay with us.”
Crypto received a boost from the debut of US spot Bitcoin exchange-traded funds (ETFs) this year, lifting the digital asset to an all-time peak in March. Australia is expected to roll out more crypto ETFs before the end of 2024, with the likes of Van Eck Associates and BetaShares Holdings lining up offerings.
“We don’t see this as cannibalising the ETF players, but more a rising tide and a big enough interest for someone to come in through their own self-managed portal,” said O’Loghlen, who worked at Ant Group and Goldman Sachs Group.
GET BT IN YOUR INBOX DAILY
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
There are still obstacles to overcome, including entrenched worries about the dangers inherent in the speculative world of crypto.
Adviser caution
Michael Houlihan, who runs a private wealth management business, cautioned against taking too large a stake. He said those interested in digital assets are typically in their 40s with lower account balances compared with older counterparts.
“You wouldn’t want a significant part of a portfolio in something that’s such high risk,” he said.
Still, global rivals such as Kraken as well as local players including BTC Markets and Independent Reserve Pty are trying to tap the self-managed opportunity.
Independent Reserve has focused on building links with financial advisers that serve self-managed funds and has developed tax-reporting tools to help woo clients, according to its chief executive officer Adrian Przelozny.
Bitcoin, the largest token, is the most popular cryptocurrency held by self-managed super funds, making up around 60 per cent of digital-asset holdings, according to data from BTC Markets chief executive officer Caroline Bowler. “Self-managed super funds are a growing client base,” and “tend to be cautious in their allocations”, she said.
ASX, which handles around four-fifths of Australia’s equity trading, is expected to approve the first spot-Bitcoin ETFs for the main board in the coming months.
“With the launch of Australian Bitcoin ETFs poised for later this year, this is a space we anticipate will continue to grow,” said Jonathon Miller, a managing director at Kraken. BLOOMBERG
