Coinbase Eyes $600B Aussie Pensions for Crypto Growth

Coinbase targets Australia's $600 billion pension sector, eyeing growth in self-managed funds with $664 million in crypto.

By Alex P. Chase

5/15, 14:24 EDT
Bitcoin / U.S. dollar
Coinbase Global, Inc.

Key Takeaway

  • Coinbase targets Australia's $600 billion pension sector, eyeing the self-managed funds' $664 million crypto allocation.
  • Despite volatility concerns, Australian pensions' crypto interest grows, with Bitcoin ETFs expected to boost the market before end of 2024.
  • Competitors like Kraken and local exchanges also vie for a share of the self-managed pension fund market in Australia.

Coinbase Eyes Australian Pensions

Coinbase Global Inc., the leading US cryptocurrency exchange, is strategically targeting Australia's self-managed pension sector, recognizing its potential for growth. The Asia-Pacific Managing Director, John O’Loghlen, highlighted the development of a service aimed at this sector, which represents a significant portion of Australia's $2.5 trillion pension system. Currently, self-managed pensions have approximately A$1 billion ($664 million) invested in crypto, according to the latest data from the Australian Taxation Office. This focus comes amidst a backdrop where Australia's institutional money managers remain cautious about the digital asset sector due to its history of volatility and scandals.

The Rise of Self-Managed Crypto Investments

Despite the cautious stance from institutional money managers, self-managed super funds (SMSFs) in Australia show a growing interest in cryptocurrency, with Bitcoin being the most popular choice, accounting for about 60% of digital asset holdings. The interest in crypto within these funds has been bolstered by the introduction of US spot-Bitcoin exchange-traded funds (ETFs) earlier this year, which saw Bitcoin reaching an all-time high in March. With Australia expected to introduce more crypto ETFs by the end of 2024, companies like Van Eck Associates Corp. and BetaShares Holdings Pty are preparing to enter the market. O’Loghlen views this not as competition but as an opportunity that benefits the entire sector, indicating a broader acceptance and integration of crypto into traditional financial portfolios.

Adviser Caution and Market Competition

Despite the optimistic outlook, there are still significant hurdles to overcome, particularly the skepticism surrounding the speculative nature of cryptocurrencies. Financial advisers, like Michael Houlihan, express caution, advising against large allocations to crypto, especially for clients in their 40s who typically have lower account balances. This caution is echoed across the sector, with competitors such as Kraken and local exchanges like BTC Markets Pty and Independent Reserve Pty also vying for a share of the self-managed pension market. These firms are developing tools and services, such as tax-reporting features, to attract and retain clients, indicating a competitive but growing market for crypto investments within self-managed pensions.

Management Quotes

  • John O’Loghlen, Asia-Pacific Managing Director at Coinbase:

    "Self-managed super funds might just make a single allocation and set it and forget it. We are working on an offering to service those clients really well on a one-off basis — to have them trade with us and stay with us."

  • Michael Houlihan, Private Wealth Manager:

    "You wouldn’t want a significant part of a portfolio in something that’s such high risk."

  • Adrian Przelozny, CEO of Independent Reserve:

    "[Independent Reserve has] focused on building links with financial advisers that serve self-managed funds and has developed tax-reporting tools to help woo clients."

  • Caroline Bowler, CEO of BTC Markets:

    "Self-managed super funds are a growing client base," and "tend to be cautious in their allocations."

  • Jonathon Miller, Managing Director at Kraken:

    "With the launch of Australian Bitcoin ETFs poised for later this year, this is a space we anticipate will continue to grow."