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Coinbase is targeting demand for cryptocurrencies 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-managed pension sector.
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The exchange is developing a service aimed at the segment, Asia-Pacific CEO John O’Loghlen said. Such portfolios make up about a quarter of Australia’s $2.5 trillion superannuation system and have A$1 billion ($664 million) allocated to cryptocurrencies, according to the latest data from the Australian Taxation Office.
Cryptocurrencies held within these self-managed pension funds could be on track to hit a record following inflows and Bitcoin’s 55% price jump this year. But Australian 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’re working on an offering to really serve these customers well on a one-off basis, to get them to trade with us and stay with us.”
Cryptocurrencies received a boost from the debut of U.S. spot-Bitcoin exchange-traded funds this year, sending the digital asset to its all-time high in March. Australia is expected to launch more cryptocurrency ETFs before the end of 2024, with the likes of Van Eck Associates Corp. and BetaShares Holdings Pty lining up their offerings.
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“We don’t see this as a cannibalization of ETF players, but more as a rising tide and interest big enough that someone will come in through their self-managed portal,” said O’Loghlen, who has worked at Ant Group and Goldman Sachs Group Inc.
There are still hurdles to overcome, including deep-rooted concerns about the dangers inherent in the speculative world of cryptocurrencies.
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Michael Houlihan, who runs a private wealth management business, cautioned against taking too large a stake. He said those interested in digital assets are typically in their 40s with lower account balances than their older counterparts.
“You wouldn’t want a significant portion of a portfolio in something that’s so high risk,” he said.
However, global rivals such as Kraken and local players including BTC Markets Pty and Independent Reserve Pty are looking to capitalize on the self-managed opportunity.
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According to its CEO Adrian Przelozny, Independent Reserve has focused on building connections with financial advisors who serve self-managed funds and has developed tax reporting tools to help woo clients.
Bitcoin, the largest token, is the most popular cryptocurrency held by self-managed super funds, accounting for about 60% of digital asset holdings, according to data from BTC Markets CEO Caroline Bowler. “Self-managed super funds represent a growing client base” and “tend to be cautious in their allocations,” she said.
ASX Ltd., which handles about four-fifths of Australian stock trading, is expected to approve the first spot Bitcoin ETFs for the main board in the coming months.
“With Australian Bitcoin ETFs expected to launch later this year, this is a space we expect will continue to grow,” said Jonathon Miller, chief executive of Kraken.
–With assistance from Amy Bainbridge.
(Updates Bitcoin performance in the third paragraph.)
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