The ASX has listed its first spot Bitcoin exchange-traded fund (ETF), the VanEck Bitcoin ETF (VBTC).

“We’re really pleased to admit the ASX’s first Bitcoin ETF, responding to increased customer demand for access to cryptocurrency assets, and providing access to more investment options for Australians,” said Andrew Campion, General Manager of Investment Products & Strategy at ASX.

The ETF’s launch aligns with the increasing mainstream acceptance of crypto assets like Bitcoin and Ethereum. 

“At ASX, a key part of our role is to ensure that investors can have confidence in trading securities and have certainty in the structure of their holdings,” Campion said. 

“To achieve this, we’ve been working on bringing a crypto asset ETF to market for a number of years, including establishing a new category of permissible underlying assets for ETFs in August 2022 which includes Bitcoin and Ether.”

Unlike trading on crypto exchanges, this ETF allows investors to trade Bitcoin through a traditional brokerage account, making the process simpler and more accessible. 

“Trading units with exposure to Bitcoin via an ETF on an exchange like ASX means you’re able to buy and sell those units through a traditional brokerage account, simplifying the process and opening the opportunity to more Australians,” Campion added.

The VanEck Bitcoin ETF is backed by actual Bitcoin holdings in a US-domiciled master fund, ensuring each unit reflects a specific amount of Bitcoin. 

This structure provides transparency and robustness in valuation. 

“As the demand for digital assets continues to grow, we are proud to offer a regulated avenue for Australian investors to access the crypto asset market,” Campion said.

While Bitcoin ETFs have been available on the smaller Cboe Australia, this is a first for the ASX. 

Similar products have gained traction globally, such as BlackRock’s spot Bitcoin ETF in the US, which now manages almost AU$30 billion in assets.

ETFs are investment products that track the performance of an underlying asset and are traded on public stock exchanges. 

Bitcoin ETFs offer a regulated method for investors to gain exposure to the cryptocurrency market without direct ownership. They can be spot ETFs, which hold the asset, or futures ETFs, which invest in derivative securities to mimic the asset’s performance.

In the US, spot Bitcoin ETFs have seen significant success, with 11 approved by the Securities and Exchange Commission in January. 

These funds collectively manage over AU$75 billion in assets. 

In contrast, the Australian Bitcoin ETF market is smaller. Global X’s ‘EBTC’, trading on Cboe Australia since 2022, manages just over AU$100 million in assets.

The introduction of VBTC has sparked a competitive environment, with Global X reducing its management fee to 0.59 per cent to match VanEck’s offering. 

Management fees significantly impact long-term returns, making this an important consideration for investors.