Coinbase plans to develop cryptocurrency services for self-managed retirement funds in Australia to target potential strong demand

According to the Zhitong Finance and Economics APP, the largest cryptocurrency exchange in the United States, Coinbase Global (COIN.US), is targeting the potential demand in Australia's rapidly growing self-managed pension industry. John O'Loghlen, the Managing Director of Coinbase in the Asia-Pacific region, stated that the exchange is developing a service tailored to this niche market.

The latest data from the Australian Taxation Office shows that such portfolios account for about a quarter of Australia's $2.5 trillion pension system, with $1 billion Australian dollars (US$664 million) allocated to cryptocurrencies.

Following this year's inflow of funds and a 55% increase in Bitcoin prices, the cryptocurrency assets held by these self-managed retirement funds may reach historic highs. However, due to the industry's history of scandals and sometimes severe volatility, Australian institutional fund management companies have largely avoided this sector.

O'Loghlen stated in an interview, "Self-managed super funds may only make one allocation and then forget about it. We are providing these clients with a one-time quality service to trade with us and stay with us."

This year, the debut of the U.S. Bitcoin spot ETF has driven the development of cryptocurrencies, leading to a historic high for digital assets in March. Australia is expected to launch more cryptocurrency ETFs by the end of 2024, with companies such as Van Eck Associates Corp. and BetaShares Holdings Pty set to introduce them.

O'Loghlen mentioned, "We don't see this as cannibalizing ETF participants, but more as an upward trend and a great interest from individuals managing their own investments."

However, there are still some obstacles in the industry that need to be overcome, including deep-rooted concerns about the inherent risks of the cryptocurrency speculation world.

Michael Houlihan, who runs a private wealth management company, warned against holding too many shares. He stated that those interested in digital assets are typically in their 40s, with lower account balances compared to older peers.

He said, "You wouldn't want a significant portion of your portfolio invested in something with such high risk."

Nevertheless, global competitors like Kraken, as well as local participants such as BTC Markets Pty and Independent Reserve Pty, are all trying to capitalize on this self-managed opportunity Adrian Przelozny, CEO of Independent Reserve, stated that the company has been committed to establishing connections with financial advisors who serve self-managed funds and has developed tax reporting tools to help attract clients.

According to data provided by Caroline Bowler, CEO of BTC Markets, Bitcoin, the largest token by market value, is the most popular cryptocurrency held by self-managed super funds, accounting for about 60% of digital asset holdings. She stated, "Self-managed super funds are a growing customer base," and "tend to be cautious in their allocations."

ASX Ltd., which handles about three-quarters of stock trading in Australia, is expected to approve the first batch of spot Bitcoin ETFs to be listed on the main board in the coming months.

Jonathon Miller, Managing Director of Kraken, stated, "With the launch of Bitcoin ETFs in Australia later this year, we expect this sector to continue to grow."