The boss of Perth-based blockchain minnow Digital X reckons the cowboy world of cryptocurrency is “crying out” for regulation as she campaigns for one of the first Bitcoin exchange traded fund on the Australian Securities Exchange.
With “eye bleeding” volatility and “enormous” risk, dabbling in the currency-stroke-commodity is not something chief executive Lisa Wade recommends for the faint of heart. But she believes they are attributes the sector needs to own if it’s going to have a shot at going mainstream.
“There are now three certainties in life — death, taxes and volatility in digital assets,” she said. “We need to own that volatility and be really honest about it.”
Digital X’s pursuit of regulatory approval for a Bitcoin ETF comes a decade after the company was founded by fallen tech star Eugeni “Zhenya” Tsvetnenko, who is serving out an eight-year jail sentence in the US for a multimillion-dollar auto-subscribing phone scheme.
The firm was confronted with more PR frustrations in 2021, when it had to answer questions from this masthead about former director and Australian crypto entrepreneur Samuel Lee, who was earlier this year charged in the US for his role in an alleged $US1.7 billion crypto scheme.
Both of these matters were nothing to do with Digital X, which also pointed out it had never had any regulatory complaint made against it.
They are former connections the firm hasn’t totally shaken off in the several years since Tsvetnenko and Lee left, and offer a glimpse into the reputational rehab many in the Australian crypto industry seem to be calling for.
Digital X has also been waiting for more than a year on a judgement in a Federal Court battle with Tsvetnenko’s co-founder over who rightfully owned two crypto accounts caught in the collapse of Japanese Bitcoin exchange Mt Gox in 2014.
Upwards of $10 million is potentially at stake in that battle, thanks to Bitcoin having rallied from about $US42,692 ($64,372) in January 2024 to $US67,583 ($101,904) at the start of June.
In 2022 the Digital X board drew a line in the sand, and found a new front woman in former NAB digital innovation leader Ms Wade, who has led the firm’s team of more than 20 since with a mission to “democratise and demystify digital asset investment for Australians”.
She said Digital X prides itself on being a “safe pair of hands” for retail investors wanting to dabble in the complex world of crypto and is big on getting the sector regulated in Australia.
“The industry is growing up,” she told The West Australian. “We’ve gone from being anti-regulation to really crying out to be regulated, so that we can be seen as a credible financial investment.”
She views the recent admission of Bitcoin spot ETFs managed by the likes of global giants BlackRock, Invesco, VanEck and Fidelity in the US as encouraging signs of a “maturing” industry.
“If (and) when the ASX approves our products, it will be deemed as high risk because that’s what it is,” Ms Wade said. The ASX approved Van Eck’s Bitcoin ETF to make its debut this week.
Digital X lodged the ETF application with the ASX in January. The digital investment firm also runs three other digital asset funds.
Federal Financial Services Minister Stephen Jones held a two-month consultation period regarding the regulation of digital asset platforms, that would require them to hold an Australian Financial Services Licence, taking the view Bitcoin is a “new and emerging class of asset.”
Further consulting on draft legislation is expected this year.
Australian Securities and Investment Commission chair Joe Longo said at a crypto summit in October 2023 that the “question of trust has been at the heart of crypto since its inception, with cryptocurrencies first developed to remove the need to work with (or trust) intermediaries or governments.”
“We need regulation to ensure trust isn’t misplaced,” he said.