Coinbase Sets Sights on Australia’s Booming $600B Pension Fund
Coinbase, the leading cryptocurrency exchange, has ambitious plans to target Australia’s self-managed pension sector, which is valued at a staggering $600 billion, according to a report by Bloomberg. The US-based exchange is developing a specialized service to cater to the growing demand for crypto products in Australia, confirmed John O’Loghlen, Coinbase’s Asia-Pacific Managing Director.
“We are working on an offering to provide excellent service to self-managed super funds on a one-off basis, allowing them to trade with us and stay with us,” O’Loghlen stated. 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 around AU$1 billion ($664 million) in crypto assets, a decrease from the peak of AU$1.5 billion seen in 2021.
The decline in crypto investments can be attributed to some institutional money managers in Australia who are wary of the sector due to past scandals and its volatile nature. However, recent developments such as discussions to launch crypto exchange-traded funds (ETFs) in Australia and the increase in Bitcoin prices have led to a significant uptick in the amount of crypto assets held within these self-managed retirement funds.
It is worth noting that Australian investors have suffered losses in the past due to risky bets on cryptocurrencies made through do-it-yourself (DIY) pension funds. These losses have raised concerns about the appropriateness of such high-risk investments in retirement savings. Michael Houlihan, the head of a private wealth management firm, cautioned against allocating a significant portion of one’s portfolio to risky assets.
“You wouldn’t want to have a large stake in something that carries such high risk,” Houlihan warned. He also mentioned that investors interested in cryptocurrencies are typically in their 40s with low account balances. The risks associated with these investments have prompted calls for stricter regulations to protect pension funds.
In contrast to Australia, the UK has implemented regulations that prevent self-managed pension funds from directly investing in Bitcoin or other cryptocurrencies. This ensures a level of oversight and protection for pension fund investors.
As Coinbase sets its sights on Australia’s lucrative pension market, it remains to be seen how the demand for crypto products will evolve and whether stricter regulations will be implemented to protect investors from potential losses.
