Australia's first Bitcoin ETF is listing next week. Here's what you need to know

Bitcoin in ETF form is set for launch next week…

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Key points

  • Australia's first spot Bitcoin ETF is expected to launch next week on 27 April
  • Sydney-based Cosmos Asset Management has partnered with Purpose Investments to make the product possible
  • The clearinghouse, ASX Clear, has said it's reached the minimum required four clearing participants

History will be made next week as Australia looks set to usher in its first Bitcoin (CRYPTO: BTC) exchange-traded fund (ETF).

In a monumental step for the cryptocurrency community, Cboe Australia (formerly Chi-X) will welcome the first crypto-backed ETFs in the country on 27 April. Making this event a reality is Sydney-based investment company Cosmos Asset Management, which has received the all-clear for its Bitcoin ETF product.

Demand for cryptocurrency products has been elevated despite the Bitcoin price being down 14.7% year-to-date.

Leading the charge for Bitcoin in Australia

If all goes to plan, Cosmos will be making it possible for Aussie investors to gain access to Bitcoin through an ETF on Wednesday. However, how this is being done may not be how you would have thought.

Cosmos won't be directly buying and holding Bitcoin to back the ETF. Instead, the asset manager has partnered with Toronto-based Purpose Investments to bring this product to life.

For context, Purpose introduced the first 'physically-backed' Bitcoin ETF in the world around a year ago, appropriately titled the Purpose Bitcoin ETF. At present, the Purpose ETF holds A$1.08 billion in assets under management.

The product being offered by Cosmos will act as a conduit to the Purpose ETF. In simple terms, for every $1 someone invests in the Cosmos fund, Cosmos will buy another $1 worth in the Purpose ETF.

According to the AFR, ASX Clear has reached the minimum number of four stockbroking firms to proceed with the launch. Reportedly, the clearinghouse is requiring the participating firms to provide 41% of the collateral for trades. A proposition that ETF Securities chair Graham Tuckwell finds to be "ridiculous".

Where to next for the Bitcoin ETF market?

People within the ETF industry are speculating that $1 billion could find its way into the crypto product upon launch. Unsurprisingly, with such obscene numbers being thrown around, others are also looking to tap the market.

It is believed that ETF Securities is working with 21Shares to create its own Bitcoin ETF. In addition, an Ethereum (CRYPTO: ETH) is said to be in the works.

Although, Tuckwell has simmered expectations for billion-dollar inflows, stating:

I don't think it will be millions and millions of dollars on days one, two or three.

Other experts are containing their excitement until an ASX-listed Bitcoin ETF appears.

Motley Fool contributor Mitchell Lawler owns Bitcoin and Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin and Ethereum. The Motley Fool Australia owns and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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