Two digital asset exchange-traded fund (ETF) issuers in Australia are set to exit the market amid increased scrutiny from the regulator and a deepening crypto winter, although 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 be pulling back from the crypto ETF scene.
On Nov. 6, Holon said it may close its three retail crypto funds following a crackdown by the Australian financial regulator, which accused the fund of failing to “describe the risks to investors in its target market determination applications,” according to a report from the Australian Financial Review (AFR).
This comes after the Australian Securities and Investments Commission (ASIC) issued an interim pull-down order on 17 October targeting Holon’s three funds due to non-compliant target market determinations (TMDs).
The AFR report notes that Holon argued that the crypto funds were designed to be part of a diversified portfolio, not the majority of an investment strategy, though that may have fallen on deaf ears.
Another crypto ETF issuer, Cosmos, is also jumping on the bandwagon with last week’s announcement that it will delist its crypto ETFs from the Cboe Australia exchange.
According to the report, sources said that Cosmos has failed to attract sufficient assets under management to remain viable. It also had heavy overhead 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 will be delisted in Australia as the 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 over 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 still has a “strong belief in digital assets and has no plans to close any crypto ETPs,” noting:
“We are very positive about the crypto markets in general, digital assets and decentralized finance – we see enormous potential there.”
However, Metcalf noted that the funds have experienced a “relatively quiet” reception from investors amid the current market downturn, while there has been a “reluctance” from local stockbrokers to give clients access to his funds.