ASX investors have largely embraced the cryptocurrency markets in recent years, and everything that crypto coins like Bitcoin (CRYPTO: BTTC) or Ethereum (CRYPTO: ETH) have to offer. Earlier this year, we looked at how Bitcoin was pipping gold as an investment choice for many Aussies today.
However, the ASX has certainly been more restrained in its embrace of the new crypto world.
The ASX and the Australian Securities and Investments Commission (ASIC) have knocked back the idea of an ASX-listed Bitcoin exchange-traded fund (ETF) before. Unlike over in the US, no Australian company has yet decided to put some of its balance sheet assets into cryptocurrencies (more on that later).
As a report in the Australian Financial Review (AFR) notes today, the ASX has also knocked back a company called Animoca Brands from listing, despite a US$1 billion valuation. Animoca Brands hosts a non-fungible token (NFT) platform. Although NFTs are not the same thing as cryptocurrencies, clearly they are a little too close for comfort for the ASX in their shared use of blockchain technology.
But the ASX is now facing a bit of a watershed moment. That's due to the upcoming potential merger of Afterpay Ltd (ASX: APT) and the US payments giant Square Inc (NYSE: SQ).
Afterpay lit the ASX on fire last week when it announced that it has agreed to be acquired by Square in an all-scrip deal. If the deal goes ahead, Afterpay shareholders will receive 0.375 shares of Square for every share of Afterpay owned.
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Square and Afterpay bring Bitcoin to the ASX 200
Here's where this gets mightly relevant. Square will also be offering its shares on a CHESS Depositary Interest (CDI) basis to Aussie investors on the ASX, once Afterpay shares disappear from trading.
That means that ASX investors will either be able to elect to receive NYSE-listed Square shares or shares of the new Square CDI on the ASX.
That, in turn, means Square might become one of the largest listings on the ASX. That's despite its status as an American company. One with a current market capitalisation of US$123.5 billion to boot.
But here's the real issue that the ASX is facing. Square is a payments giant. However, it is also deeply submerged in the world of cryptocurrencies. Whilst not yet available in Australia, its Cash App allows US customers to trade, send or receive Bitcoin and other cryptocurrencies. It also allows users to buy and sell other goods and services with cryptos.
The AFR report tells us that Square has just announced that it increased its Bitcoin revenues by 200% year on year to US$2.7 billion in its most recent reported quarter. It also states that Square has a large number of Bitcoins on its balance sheet — 8,027 of them, in fact.
This might be a little confronting for the ASX and ASIC, who have clearly been, at best, lukewarm on the presence of cryptocurrencies on the ASX.
Long story short, the ASX is facing a Brave New World. Suddenly, one of its largest holdings might be a cryptocurrency giant. A giant with almost US$363 million worth of Bitcoin on its books, no less. That's a different look for the ASX 200 than what most of us are used to!
