Coinbase Takes on Custodial Responsibilities for Australia’s New Spot Bitcoin ETF by DigitalX

On July 19, DigitalX announced that cryptocurrency exchange Coinbase would serve as its custody partner for the newly launched spot Bitcoin ETF (BTXX). The custody arrangement for the DigitalX Bitcoin ETF (BTXX) highlights the exchange’s expanding role in bolstering the infrastructure for Bitcoin ETFs globally.

DigitalX Chooses Coinbase as Custody Provider for Its New Australian Spot Bitcoin ETF

This detail was verified in the official fact sheet for BTXX published by DigitalX.

BTXX aims to deliver returns that reflect the performance of Bitcoin by holding BTC over the long term.

“The fund is designed to be a passive holder of Bitcoin and will not engage in buying and selling Bitcoin except to facilitate redemptions and the creation of Bitcoin interests,” the fact sheet states.

Coinbase to Provide Custody for Australian Bitcoin ETF BTXX

DigitalX, a company listed on the ASX, has chosen Coinbase to provide custody and advanced trading execution services for its recently approved Bitcoin exchange-traded fund (BTXX) in Australia. This collaboration will offer… pic.twitter.com/KNglSEzB33

— EchoeWeb (@Echoeweb) July 29, 2024

The DigitalX Bitcoin ETF (BTXX) was officially launched on July 12, following the approval from the Australian Securities Exchange (ASX) on July 9.

Since the authorization of spot Bitcoin ETFs in the United States in January 2024, Coinbase has become a partner and custody provider for ten spot Bitcoin ETFs and eight of the nine newly approved Ether ETFs.

A custodian is a licensed entity that holds digital assets on behalf of companies or individuals. Thus, custodians play a vital role in the expansion of the ETF market by safeguarding billions of dollars worth of cryptocurrency owned by the ETF.

Furthermore, the DigitalX spot Bitcoin ETF is not the inaugural Australian spot Bitcoin ETF. It is worth noting that the country’s first Bitcoin ETF, the VanEck Bitcoin ETF (VBTC), was launched on the Australian Securities Exchange (ASX) on June 20.

VBTC is structured as a feeder fund to provide exposure to Bitcoin by investing in VanEck’s US Bitcoin Trust (HODL), which is listed on the Chicago Board Options Exchange (CBOE).

Crypto Adoption and Regulatory Environment in Australia

Australia has experienced significant growth in cryptocurrency ownership and adoption in recent years. The rate of crypto ownership in Australia is currently at 17%, exceeding the global average of 15%.

Independent research conducted by Roy Morgan indicates that the number of Australians interacting with digital assets has reached unprecedented heights.

The findings reveal that over 1.1 million Australians now possess at least one type of cryptocurrency.

The Australian Tax Office (ATO) has also highlighted the extent of crypto adoption in a report indicating that approximately 600,000 Australians have officially reported crypto holdings in their tax returns.

Moreover, a 2022 survey by the Australian Securities and Investments Commission (ASIC) ranks cryptocurrencies as the second most favored investment product among Australians, following domestic shares.

Despite the growing interest and adoption, the regulatory landscape for cryptocurrencies in Australia remains challenging.

Countries with Active Bitcoin ETFs:
USA
Brazil
Canada
Germany
Australia
Hong Kong
Switzerland

The global adoption of Crypto ETFs is on the rise, providing investors with innovative avenues to engage with the evolving cryptocurrency market. This widespread…

— Rahul Rohit Parikh SaitaChain (@rahulparikh94) June 5, 2024

For example, Binance Australia faced difficulties in May 2023 when it had to halt Australian dollar deposits and withdrawals due to issues with a third-party service provider.

The situation became more complicated in July 2023 when ASIC conducted searches at the offices of Binance Australia.

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