(Bloomberg) -- Coinbase Global Inc., the largest U.S. cryptocurrency exchange, is focusing on potential demand in Australia's growing self-managed pensions sector.
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The exchange is developing a service aimed at this segment, said Asia-Pacific CEO John O'Loghlen. These portfolios represent about a quarter of Australia's $2.5 trillion pension system and have A$1 billion ($664 million) allocated to cryptocurrencies, the latest data from the Australian Taxation Office shows.
Crypto assets held within these self-managed retirement funds may be on track to hit a record high following inflows and Bitcoin's 55% price rise this year. But Australia's institutional money managers largely avoid the digital asset sector, given its history of scandals and sometimes intense volatility.
"Self-managed super funds could simply make a single allocation, set it and forget it," O'Loghlen said in an interview. "We are working on an offer to serve those clients very well in a unique way, so that they do business with us and stay with us."
Cryptocurrencies received a boost with the debut of US spot Bitcoin exchange-traded funds this year, lifting the digital asset to an all-time high in March. Australia is expected to launch more crypto ETFs before the end of 2024, with companies such as Van Eck Associates Corp. and BetaShares Holdings Pty lining up offerings.
Read more: Bitcoin ETF craze heads to Australia after $53 billion US haul
"We don't see this as a cannibalization of ETF players, but rather a rising tide and interest large enough for someone to come in through their own self-managed portal," said O'Loghlen, who worked at Ant Group and Goldman Sachs. group inc.
There are still hurdles to overcome, including long-held concerns about the dangers inherent in the speculative world of cryptocurrencies.
Advisor Caution
Michael Houlihan, who runs a private wealth management firm, warned against taking too large a stake. He said those interested in digital assets tend to be in their 40s and have lower account balances compared to their older counterparts.
"You wouldn't want a significant portion of a portfolio to be in something that high risk," he said.
Still, global rivals like Kraken, as well as local players including BTC Markets Pty and Independent Reserve Pty, are trying to take advantage of the self-management opportunity.
Independent Reserve has focused on creating links with financial advisors who serve self-managed funds and has developed tax filing tools to help attract clients, according to its chief executive, Adrian Przelozny.
Bitcoin, the largest token, is the most popular cryptocurrency held by self-managed super funds and accounts for around 60% of digital asset holdings, according to data from BTC Markets CEO Caroline Bowler. โSelf-managed super funds are a growing client baseโ and โtend to be cautious in their allocations,โ she said.
ASX Ltd., which handles about four-fifths of Australia's share trading, is expected to approve the first spot Bitcoin ETFs for the main board in the coming months.
โWith the launch of Australian Bitcoin ETFs scheduled for later this year, this is a space we anticipate will continue to grow,โ said Kraken CEO Jonathon Miller.
--With help from Amy Bainbridge.
(Updates Bitcoin performance in third paragraph.)
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