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Cryptocurrency Scene Down Under Buoyed by Self-Managed ‘Super Funds’

Benson Toti

Even though the leading cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), are experiencing a downturn in fortunes, a recent report has revealed trading volumes of these digital assets accelerated hugely in Australia during the opening half of 2018. The cryptocurrency industry is in a state of flux at present, thanks to volatile prices and the issue of many assets struggling to identify as either new technologies or traditional finance.

The price of Ethereum suffered an 85% fall in its value from its January 2018 highs. That’s despite the fact it is the second-largest digital asset in terms of market capitalisation, suggesting no digital asset is immune from volatility. However, the appetite for crypto investments appears to be rife down under, in a nation where cryptocurrency has been warmly embraced by the masses. Trading volumes during H1 2018 totalled $1.5 billion, due in no small part to the growth of Australian self-managed super funds (SMSFs) that have started to infiltrate the industry.

A report by Business Insider Australia saw them interview two leading figures in the Australian crypto space, with Jordan Michaelides, head of institutional investment at Coinjar, confirming the trading volumes to add further credence to the belief that Australia’s crypto exchanges had moved up a notch. Furthermore, Adrian Przelozny, CEO of Independent Reserve, another leading crypto exchange, commented on “significant activity” in the cryptocurrency markets down under, with SMSFs appealing to small-scale investors focused on high-risk, high-return portfolios.

Mr Przelozny confirmed the number of SMSF clients signed up to the Independent Reserve platform had risen by “around six or seven thousand”. Although this figure seems like a drop in the ocean compared with the 590,000 SMSF clients outside of the crypto space in Australia, it does represent a clear growth trend for digital assets. Meanwhile, Mr Michaelides believes that exchange-traded funds (ETFs) hold the key to heightened interest in cryptocurrencies across Australia, but that their future depends on “what happens in America” in terms of the US’ categorisation and prohibition of digital assets.

Encouragingly for Australian-based crypto investors, the nation’s Prime Minister, Scott Morrison, appears to be a firm believer in the technology that underpins the leading cryptocurrencies – blockchain – insisting there are “massive opportunities” on the horizon for blockchain tech. Morrison intimated that blockchain could revolutionise and future-proof Australia’s financial system offering new and exciting challenges to traditional high street banks and lenders.

Nevertheless, a spokesperson for corporate regulator, ASIC, was rather more cautious about the increased trading volumes on Australia’s crypto exchanges adding that “tracking the actual industry is even newer than the sector itself”. The spokesperson cited the fact that “much of the so-called cryptocurrency activity is either unregulated or regulated only in part”. Consequently, there are still pitfalls and hurdles ahead to overcome, but the signs are most certainly encouraging. Australia’s financial intelligence agency, AUSTRAC is also monitoring the cryptocurrency market closely, which should give investors confidence that exchanges will continue to operate in accordance with federal legislation going forward.

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