US regulator’s approval could trigger bitcoin rush among SEA investors

Last Wednesday, the US Securities and Exchange Commission (SEC) approved the listing of bitcoin spot exchange-traded funds (ETFs), a move that will likely accelerate the flow of capital from Southeast Asia into cryptocurrencies.

Unlike centralized exchanges, which allow investors to purchase cryptocurrencies, an ETF enables them to invest in funds that hold these assets without buying them directly. The onus for security falls on the fund.

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But anyone looking to buy in now to give their portfolios a boost will need to be patient. The SEC’s approval has been priced into the market since a US Federal appeals court ruled in August 2023 that the agency failed to adequately explain why it was barring the listing and trading of bitcoin ETFs.

Kok Kee Chong, CEO of AsiaNext, a Singapore-based crypto exchange that only serves institutional investors, expects it to take six months for the new funds to achieve mainstream adoption.

“Crypto is different. It’s not like stocks,” he tells Tech in Asia. “Crypto is very diversified and it’s already been traded a lot in the crypto-native world.”

On Friday, bitcoin was trading at US$46,000, only about US$2,000 above the price it had been trading at since December. That is still up significantly from the US$26,000 price that bitcoin was trading at in August at the time of the court ruling.

But Chong estimates that after six months, bitcoin could rise to US$70,000, above its all-time high price of US$67,617 in November 2021. He says interest from institutional investors, including private equity funds and especially family clients, will push the token higher.

Chong points to a UBS survey from two years ago that shows how clients are interested in allocating up to 3% of their portfolio into alternative asset classes like crypto.

“Three to 4% of institutional assets under management is very significant. Now, that alone will propel the trading volumes,” he says.

He adds that the investors he has talked to are “very keen” to invest in ETFs and have been waiting for a more simple and secure way of entering the crypto market.

Having to deal with wallets and custodians, as well as the lack of connections to traditional banks and the possibility of being hacked, turned off many would-be investors, especially fund managers who handle other people’s money, he says.

But the main reason that private equity will now join the crypto market, according to Chong, is that “regulated adults [will be] sitting in the room looking after investors’ interest.” According to the SEC, the bitcoin ETFs “will be required to provide full, fair, and truthful disclosure about the products.”

ETF may not make a difference

That said, not everyone thinks the SEC’s approval is a good thing.