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Coinbase targets crypto demand in Australia’s $600 billion superannuation sector
(Bloomberg) — Coinbase Global Inc., the largest U.S. cryptocurrency exchange, is focusing on potential demand in Australia’s growing self-directed superannuation sector.
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The exchange is developing a service that targets this segment, Asia Pacific managing director John O’Loghlen said. These wallets represent around a quarter of Australia’s $2.5 trillion superannuation system and have A$1 billion ($664 million) allocated to crypto, according to the latest data from the Australian Taxation Office.
Cryptoassets held in these self-directed retirement funds could be on track to hit a record high after capital inflows and the 55% rise in the price of Bitcoin this year. But Australian institutional fund managers are largely shying away from the digital assets sector, given its history of scandals and sometimes intense volatility.
“Self-managed super funds could just make a one-off allocation, set it and forget it,” O’Loghlen said in an interview. “We are working on an offering to serve these customers very well on an ad hoc basis – so that they negotiate with us and stay with us. »
The crypto received a boost from the debut of U.S. spot exchange-traded funds this year, lifting the digital asset to an all-time high in March. Australia is expected to roll out more crypto ETFs before the end of 2024, with companies like Van Eck Associates Corp. and BetaShares Holdings Pty lining up their offerings.
Read more: Bitcoin ETF fad heads to Australia after $53 billion haul to US
“We don’t see this as a cannibalization of ETF players, but rather a rising tide and interest big enough for someone to enter through their own self-directed portal,” said O’Loghlen, who worked at Ant Group and Goldman Sachs. Group Inc.
There are still hurdles to overcome, including deep-seated concerns about the dangers inherent in the speculative world of crypto.
Caution of the advisor
Michael Houlihan, who runs a private wealth management business, warned against taking too big a stake. He said people interested in digital assets are typically in their 40s and have lower account balances than their older counterparts.
“You wouldn’t want a significant portion of a portfolio to be invested in such a high-risk sector,” he said.
Yet global competitors such as Kraken as well as local players such as BTC Markets Pty and Independent Reserve Pty are trying to exploit this self-managed opportunity.
The story continues
Independent Reserve has focused on building connections with financial advisors who serve self-managed funds and developed tax reporting tools to help woo clients, according to its CEO Adrian Przelozny.
Bitcoin, the largest token, is the most popular cryptocurrency held by self-managed super funds, accounting for around 60% of digital asset holdings, according to data from Caroline Bowler, managing director of BTC Markets. “Self-managed super funds are a growing customer base” and “tend to be conservative in their allocations,” she said.
ASX Ltd., which handles about four-fifths of Australia’s equity trading, is expected to approve the first spot-Bitcoin ETFs for the main board in the coming months.
“With the launch of Australian Bitcoin ETFs planned for later this year, we expect this space to continue to grow,” said Kraken Managing Director Jonathon Miller.
–With help from Amy Bainbridge.
(Updates Bitcoin performance in third paragraph.)
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