Two digital asset exchange-traded fund (ETF) issuers in Australia are set to leave the market amid heightened regulator scrutiny and a deepened crypto winter, though some remain bullish about the market’s prospects.

In the last week, Australian crypto ETF providers including Holon Investments and Cosmos Asset Management have indicated they may be stepping back from the crypto ETF scene.

On Nov. 6, Holon said it might close its three retail crypto funds following a hardline stance from the Australian financial regulator which has accused the fund of failing to “describe the risks to investors in its target market determination filings,” according to a report from the Australian Financial Review (AFR).

It comes after the Australian Securities and Investments Commission (ASIC) issued an interim stop order on Oct. 17 directed at Holon’s three funds due to non-compliant target market determinations (TMDs).

The AFR report notes that Holon has argued that the crypto funds were designed to be part of a diversified portfolio, not the majority of an investment strategy, though it may have fallen on deaf ears. 

Another crypto ETF issuer Cosmos is also jumping ship with last week’s announcement that it would de-list its crypto ETFs from the Cboe Australia exchange.

According to the report, sources stated that Cosmos failed to attract sufficient assets under management to remain viable. It also had heavy overheads in crypto custody and professional indemnity insurance costs.

According to public disclosures in September, Cosmos had around $1.6 million in AUM for its combined BTC and ETH funds.

Related: Three crypto ETFs to be delisted in Australia as crypto winter continues

However, some crypto ETF providers appear to remain committed to the market, which is expected to see one million new crypto adopters over the next 12 months, according to a recent survey from crypto exchange Swyftx. 

Providers currently involved in the Australian crypto ETF market include 3iQ Digital Asset Management, Monochrome Asset Management, and Global X Australia, formerly known as ETF Securities. 

Global X Australia chief executive Evan Metcalf told the AFR that the firm continues to have a “strong conviction in digital assets and has no plans to close any crypto ETPs,” noting: 

“We are very bullish on the crypto markets in general, digital assets, and decentralized finance – we see enormous potential there.”

Metcalf did however note that the funds had experienced a “relatively quiet” reception from investors amid the current market downturn, while there was an “unwillingness” from local stockbrokers to provide clients access to its funds.