The Zhitong Finance App has learned that the largest US cryptocurrency exchange Coinbase Global (COIN.US) is targeting the potential demand for Australia's growing self-managed pension industry. Coinbase Asia Pacific managing director John O'Loghlen said the exchange is developing a service for this market segment.

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

Cryptocurrency assets held in these self-managed pension funds may be expected to reach a record high after capital inflows and a 55% rise in the price of Bitcoin this year. But given the digital asset industry's scandalous history and sometimes sharp fluctuations, Australian institutional money managers have largely shied away from the industry.

In an interview, O'Loghlen said, “Self-managed superfunds may only be allocated once and then stopped following. We're providing these customers with a one-off, excellent service to trade with us and stay with us.”

This year, the debut of an American spot Bitcoin ETF boosted the development of cryptocurrencies, bringing the digital asset to an all-time high in March. Australia is expected to launch more cryptocurrency ETFs by the end of 2024, and companies such as Van Eck Associates Corp. and BetaShares Holdings Pty will launch one after another.

“We don't think this is cannibalization of ETF participants, but more of an upward trend and a huge interest in people getting involved through their own self-management,” O'Loghlen said.

However, the industry still has some hurdles to overcome, including deep-seated concerns about the dangers inherent in the world of cryptocurrency speculation.

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

“You wouldn't want a large portion of your portfolio to be invested in something this risky,” he said.

Despite this, global competitors such as Kraken and local players such as BTC Markets Pty and Independent Reserve Pty are trying to take advantage of this self-managed opportunity.

Independent Reserve CEO Adrian Przelozny said the company has been working to connect with financial advisors who provide services to self-managed funds and has developed tax reporting tools to help attract clients.

According to data provided by BTC Markets CEO Caroline Bowler, Bitcoin, the largest token by market capitalization, is the most popular cryptocurrency held by self-managed superfunds, accounting for about 60% of digital asset holdings. “Self-managed superfunds are a growing customer base” and “tend to be very careful when allocating”, she said.

ASX Ltd., which handles about four-fifths of Australian stock transactions, is expected to approve the first batch of spot Bitcoin ETFs listed on the main board in the coming months.

Kraken managing director Jonathon Miller said: “As the Australian Bitcoin ETF is launched later this year, we expect this sector to continue to grow.”