Monochrome Asset Management is on the cusp of a significant milestone for the Australian financial market with the impending launch of the country’s first spot Ethereum exchange-traded fund (ETF) on the Cboe exchange. Scheduled to commence trading on October 14, this groundbreaking initiative aims to provide Australian investors with a more straightforward path into the world of cryptocurrency, similarly to what has already been established in the U.S. market.
In an enthusiastic announcement on October 11, Monochrome revealed its plans to introduce the Monochrome Ethereum ETF (IETH) at a private gathering in Sydney, which included key stakeholders, partners, and service providers. What sets the IETH apart is its accessibility; it will be available on numerous Australian brokerage platforms and will facilitate transfers from various crypto platforms, including decentralized and cold storage wallets. Naturally, this enhanced accessibility is expected to draw more investors into Ethereum trading.
In line with its counterparts in the United States, the IETH will track the CME CF Ether-Dollar Reference Rate, thus aligning its value closely with Ethereum’s market performance. The fund’s management fee is set at a competitive 0.5%, with reduced fees available at 0.21% for accredited advisers. Such pricing strategies are pivotal, given the competitive landscape within the ETF market, which now has a robust number of established players.
One of the most notable features of the IETH is its unique structure that allows for in-kind subscriptions and redemptions—a feature not available to most U.S. crypto ETFs, including the Bitcoin counterparts. CEO Jeff Yew recently lauded the potential tax benefits associated with this strategy. By utilizing a ‘bare trust’ mechanism, Monochrome aims to treat ETF investments as direct ownership of Ethereum, potentially alleviating tax liabilities often associated with capital gains. This innovative approach could appeal particularly to long-term investors looking for more tax-efficient strategies.
To ensure the robust functioning of the IETH, Monochrome has engaged prominent industry players for custodial and administrative functions. The involvement of BitGo and Gemini for crypto custody exemplifies a commitment to secure asset management, while State Street Australia will oversee fund administration. Such partnerships are vital in cultivating investor confidence, especially in a nascent sector plagued by concerns over asset security.
The launch of the IETH comes on the heels of Monochrome’s spot Bitcoin ETF, which, despite garnering $15 million in investments since its inception in June, still trails significantly behind figures observed in U.S. markets. Nevertheless, Monochrome appears optimistic about the IETH’s potential to attract investors due to its innovative structure and favorable tax implications. The anticipation surrounding the ETF’s launch suggests not only an important shift for Monochrome but also a significant step forward for the Australian cryptocurrency landscape, paving the way for further developments in regulated crypto investment products.
