Coinbase Sets Sights on Australia’s Booming $600B Pension Fund
Coinbase, the leading US cryptocurrency exchange, is looking to expand its services to target Australia’s $600 billion self-managed pension sector, according to a report by Bloomberg. The exchange is reportedly developing a customized service to meet the growing demand for crypto products in the country.
John O’Loghlen, Coinbase’s Asia-Pacific Managing Director, confirmed the company’s plans, stating, “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.”
Recent data from the Australian Taxation Office reveals that self-managed pension portfolios make up a significant portion of Australia’s $2.5 trillion pension system, accounting for a quarter of the total. Currently, these portfolios hold AU$1 billion ($664 million) in crypto assets, down from a peak of AU$1.5 billion in 2021.
The decline in crypto investments can be attributed to the cautious approach taken by some institutional money managers in Australia, who have been wary of the sector due to past scandals and high volatility. However, recent developments, such as the potential launch of crypto exchange-traded funds (ETFs) in Australia and the increase in Bitcoin prices, have resulted in a significant rise in crypto holdings within these self-managed retirement funds.
In addition, Michael Houlihan, the head of a private wealth management firm, has publicly warned investors against allocating a large portion of their portfolios to risky assets. He stated, “You wouldn’t want a significant part of a portfolio in something that’s such high risk.” Houlihan noted that investors interested in cryptocurrencies are typically in their 40s with low account balances.
This caution is warranted, as demonstrated by the losses incurred by thousands of Australians in 2023, who used do-it-yourself (DIY) pension funds to bet on cryptocurrencies. These risky bets resulted in hundreds of millions of dollars in losses, jeopardizing their retirement savings. These types of investments fall outside the scope of regulation by the prudential regulator that oversees professionally managed funds.
Unlike Australia, the UK has implemented regulations that prevent self-managed pension funds from directly investing in Bitcoin or other cryptocurrencies.
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