Kazakhstan launches Central Asia’s first spot Bitcoin ETF (BETF) on Astana International Exchange.
The physically-backed fund is custodied by BitGo with $250 million insurance coverage and uses offline cold storage for security. Kazakhstan has become a unique player in the crypto space by being the first to launch a spot Bitcoin exchange-traded fund in the region. The BETF fund has launched on the Astana International Exchange, which is a landmark event for Central Asia’s financial markets.
Regional Crypto Leadership Emerges
The Bitcoin Exchange Traded Fund OEIC operated by Fonte Capital began trading today on the Astana International Exchange priced in dollars. The physically-backed ETF acquires and stores Bitcoin directly; unlike futures ETFs, it gives investors direct access to the price performance of Bitcoin.
The fund’s custodian is BitGo, which has committed to providing up to $250 million in insurance coverage for investor positions. The US-regulated custodian employs cold storage and vault systems – all of which are offline – to mitigate potential hacking.
Kazakhstan emerged as a global Bitcoin mining destination with the issue of the mining industry’s ban in China over the past year. Capitalizing on the availability of subsidized coal-powered electricity and a regulatory environment that is investor-friendly, Kazakhstan was able to accommodate new arrivals that were looking to establish a base elsewhere in the world.
The Astana International Financial Centre regulates BETF and establishes a jurisdiction that advocates tout as protecting assets from sanctions. The regulations will protect investment, while reducing reliance on foreign fund issuers and exchanges.
Kazakhstan leads the regional adoption of regulated crypto assets, while its Central Asian neighbours, Uzbekistan and Kyrgyzstan, have taken a more conservative approach to crypto assets. Kazakhstan’s regulatory regime offers the potential for international investment capital and creates opportunities for a diversified financial sector.
ETFs include the ability to settle in-kind, as well as low expense ratios and low tracking error relative to Bitcoin prices, making them attractive to institutional and retail buyers seeking regulated exposure to crypto without the technical complexities.
Now investors from Almaty to London can buy shares in the BETF via AIX without worrying about private keys or cryptocurrency wallets. The ease of access provided by a traditional exchange takes away the technical challenges of public investment in Bitcoin, and these are the barriers that have kept the mainstream market from investing in Bitcoin in the region.
With its approved spot Bitcoin ETF shares available for public trading, Kazakhstan joins the U.S., Canada and Hong Kong. Fonte Capital, which has been a licensed entity with AIFC since 2022 and manager of diversified investigative portfolios, referred to the BETF as “an easy way for investors to get exposure to Bitcoin”.
The launch of the fund stems from Kazakhstan’s broader plans to integrate cryptocurrency and digital assets into traditional financial markets. This could bring in foreign capital as Kazakhstan looks to position itself as the hub of cryptocurrency in Central Asia.