Monochrome Asset Management is preparing to launch Australia’s inaugural Ethereum [ETH] exchange-traded fund (ETF) on Cboe Australia, marking a significant milestone in the country’s cryptocurrency investment sector.
Following the successful introduction of its Bitcoin [BTC] ETF (IBTC) in August 2023, which has already amassed $15 million in assets, Monochrome’s new Ether ETF (IETH) is aimed at providing Australian investors with direct exposure to ETH.
On September 5th, the asset manager submitted an application for approval, which was swiftly granted, in contrast to recent regulatory activities in the United States. The IETH trading will kick off on October 14th.
Points of Distinction Between Monochrome’s Ethereum ETF and the US Counterparts
While the Australian fund may not be as sizable as U.S. funds with billions in holdings, it stands out globally by offering Ethereum subscriptions and redemptions in-kind.
Discussing the unique tax efficiency of IETH, Jeff Yew, Monochrome Asset Management’s CEO, emphasized in an exclusive interview that the fund’s dual-access bare trust structure is tailored to prevent capital gains tax events, providing a strategic edge for long-term Ethereum holders.
This framework allows investors to transfer their Ethereum into the ETF without altering legal or beneficial ownership, potentially maximizing the tax benefits of in-kind subscriptions and redemptions.
Yew noted,
“A ‘bare trust’ means that your investment in the ETF may be treated as if you directly own the Ethereum.”
As IBTC gained traction with its ETF in-kind subscription approach, Yew remarked,
“We are starting to see an interesting pattern with our Bitcoin ETF; people are moving their custody points from crypto exchanges into the ETF; that’s actually where we are seeing the biggest growth from.”
Despite diverging tendencies, recent data from U.S. ETFs indicates notable disparities: as of October 11th, Bitcoin ETFs witnessed substantial inflows, with $253.6 million added, while Ethereum ETFs experienced minor outflows of $0.1 million.
Regardless of these differences, major players like BlackRock and Fidelity remain positive about Ethereum’s prospects.
Anticipated Challenges
Although the Australian market may not see comparable high inflows, Monochrome intends to leverage the rising local interest in crypto investments, aiming to extend its footprint as investor excitement grows in 2023.
“U.S. crypto ETFs can’t be supported in kind, including Bitcoin ETFs, and they are not operated in this timezone.”
In summary, the Monochrome Ethereum ETF (IETH) is poised to offer Australian investors wide accessibility through major brokerage platforms, facilitating crypto exchange and wallet transfers.
With fees pegged at 0.5%, reduced to 0.21% for accredited advisers, it closely aligns with U.S. market rates, which range from 0.20% to 0.25%.
Therefore, primed for expansion, IETH is well-positioned to seize any upsurge in market demand.