Coinbase Eyes $664M in Aussie Pension Crypto Market

Coinbase eyes Australia's $2.5 trillion pension sector, targeting SMSFs with nearly $664 million in crypto investments.

By Max Weldon

5/16, 03:23 EDT
Bitcoin / U.S. dollar
Coinbase Global, Inc.

Key Takeaway

  • Coinbase plans to target Australia's self-managed pension sector, eyeing the nearly A$1 billion ($664 million) in crypto held since March 2019.
  • The move comes amid growing crypto interest from Australian self-managed pensions, despite significant losses reported in March 2023.
  • This strategy aligns with global crypto momentum and potential ETF approvals in Australia, aiming to complement rather than compete with ETF offerings.

Coinbase Targets Australian Pensions

Coinbase Global Inc., the largest US cryptocurrency exchange, is setting its sights on the lucrative Australian self-managed pension sector, which is part of Australia's $2.5 trillion pension system. John O’Loghlen, Coinbase’s Asia-Pacific Managing Director, revealed plans to develop a service catering to this segment, which currently has nearly A$1 billion ($664 million) invested in crypto. This move comes as self-managed super funds (SMSFs) in Australia have shown increasing interest in cryptocurrency since March 2019, with a significant jump in crypto allocations from $131.5 million in December 2019 to nearly $664 million. Despite the sector's cautious approach due to crypto's volatility and past scandals, Coinbase aims to provide a tailored offering to attract and retain these clients.

The Rise of Self-Managed Crypto Investments

The interest in cryptocurrencies among self-managed pensions has been on the rise, particularly with Bitcoin, which constitutes about 60% of the digital asset holdings within these funds. This surge in interest is partly attributed to the debut of US spot-Bitcoin exchange-traded funds (ETFs) earlier this year, which propelled Bitcoin to an all-time high in March. With Australia expected to introduce more crypto ETFs by the end of 2024, firms like Van Eck Associates Corp. and BetaShares Holdings Pty are gearing up to launch their offerings. O’Loghlen views the upcoming ETFs not as competition but as an opportunity that underscores the growing acceptance of crypto in traditional financial portfolios.

Adviser Caution and Market Competition

Despite the growing interest in crypto from self-managed pensions, financial advisers like Michael Houlihan urge caution, particularly for clients in their 40s with lower account balances, advising against significant allocations to high-risk assets like cryptocurrencies. This cautious stance is mirrored by Australia's institutional money managers and highlights the speculative nature of the crypto market. However, global and local exchanges, including Kraken, BTC Markets Pty, and Independent Reserve Pty, are competing for a share of the self-managed pension market. These firms are focusing on developing tools and services, such as tax-reporting features, to attract and retain clients, indicating a competitive yet expanding market for crypto investments within self-managed pensions.

Management Quotes

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

    "Self-managed super funds might just make a single allocation, 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." "We don’t see this as cannibalizing the ETF players, but more a rising tide and a big enough interest for someone to come in through their own self-managed portal."