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Coinbase Eyes Australia’s Growing $600B Pension Fund

Reports from Bloomberg indicate that Coinbase, the leading US cryptocurrency exchange, has ambitious plans to cater to Australia’s $600 billion self-managed pension sector. John O’Loghlen, Coinbase’s Asia-Pacific Managing Director, confirmed that the exchange is crafting specialized services to meet the growing demand for cryptocurrency products in this sector.

O’Loghlen stated, “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 constitute a significant portion of Australia’s $2.5 trillion pension system, comprising approximately AU$1 billion ($664 million) allocated to crypto assets. This figure marks a decrease from the peak of AU$1.5 billion observed in 2021.

The decline in crypto holdings within self-managed retirement funds in Australia may be linked to cautiousness among institutional money managers, who have been wary of the sector due to past scandals and its notorious volatility. However, recent developments such as discussions about launching cryptocurrency exchange-traded funds (ETFs) in Australia, coupled with the rise in Bitcoin prices, have led to a notable uptick in the amount of cryptocurrency held within these funds.

Aussie’s DIY Pension Sector Lost Millions in Crypto Bets

Michael Houlihan, the head of a private wealth management firm, has publicly cautioned investors against allocating a large portion of their portfolio to risky assets. “You wouldn’t want a significant part of a portfolio in something that’s such high risk,” he remarked. Notably, investors showing interest in cryptocurrencies tend to be in their 40s with modest account balances, according to Houlihan.

This warning resonates with past incidents, such as in 2023, when numerous Australians utilizing do-it-yourself (DIY) pension funds to speculate on cryptocurrencies faced substantial losses totaling hundreds of millions of dollars. These speculative endeavors not only jeopardized their savings but also undermined the original purpose of these funds, which is to ensure sufficient retirement income. A Reuters analysis from last year revealed that such speculative activities fall beyond the purview of the prudential regulator responsible for overseeing professionally managed funds.

In contrast, other regions with DIY pension sectors have imposed certain regulations. For example, in the UK, self-managed pension funds are prohibited from directly investing in Bitcoin or other cryptocurrencies.

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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