Monochrome Asset Management is set to make waves in Australia’s investment scene by launching the nation’s first spot Ethereum exchange-traded fund (ETF). The move comes after years of anticipation in both the U.S. and Australian markets, and follows the successful rollout of Monochrome’s Bitcoin ETF (IBTC) in August 2023. As the first Ethereum ETF of its kind on the Australian market, the launch of IETH is scheduled for trading on Cboe from Monday, marking another milestone in the gradual mainstream acceptance of cryptocurrency-backed financial products.
What makes IETH particularly noteworthy is its innovative dual-access bare trust structure. According to Jeff Yew, Monochrome’s founder and CEO, this mechanism is designed to offer investors certain advantages that could make the ETF stand out on the global stage. The structure allows long-term cryptocurrency holders to transfer their Ethereum into the ETF without triggering a capital gains tax (CGT) event. This is a significant feature for many investors, as it allows them to move their assets without the tax implications that often come with selling or trading cryptocurrencies.
In essence, a bare trust means that an investor’s Ethereum holdings remain legally and beneficially theirs, even when transferred into the ETF. This kind of structure ensures that any actions taken by the trustee are treated as actions of the investor, thus protecting them from a CGT event as long as beneficial ownership does not change. Yew emphasises that this feature is a major differentiator between Monochrome’s ETF and similar offerings in the U.S. market. In the U.S., while spot Bitcoin and Ethereum ETFs have been approved and continue to attract substantial investments, they do not offer the same in-kind subscription option.
This latest move by Monochrome comes at a time when the U.S. Securities and Exchange Commission (SEC) has already approved a series of spot cryptocurrency ETFs, including 11 spot Bitcoin ETFs and nine Ethereum ETFs. These funds have quickly accumulated billions in assets under management, thanks to growing investor interest and confidence in cryptocurrency-backed investment products. While it’s unlikely that Australia’s market will see inflows on the same scale, Monochrome remains optimistic about the growing appetite for cryptocurrency investment options, particularly following the successful launch of its Bitcoin ETF earlier this year.
Yew is quick to point out that the geographical advantage of operating in Australia’s timezone gives Monochrome’s ETFs a leg up over their U.S. counterparts for local investors. Since U.S.-based crypto ETFs cannot operate on an in-kind basis and are not run in an Australian-friendly timezone, Monochrome’s IETH could be particularly appealing to investors looking for more flexibility and convenience.
The fund will track the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, giving it a strong connection to Ethereum’s global price movements while remaining aligned with the unique trading dynamics of the Asia Pacific region. As for fees, Monochrome has set IETH’s management fee at 0.50%, which is competitive compared to U.S. ETFs, where fees typically range between 0.20% and 0.25%. Accredited financial advisers will benefit from a reduced fee of 0.21%, making the ETF even more appealing to professionals looking to recommend crypto investments to their clients.
In addition to its pricing and structure, Monochrome is taking steps to ensure that IETH is easily accessible for investors. The ETF will be available on most Australian brokerage platforms, and it will support transfers from a wide range of crypto platforms, decentralised wallets, and cold storage wallets. This broad compatibility is a key selling point, especially as investors become increasingly interested in securing their assets across multiple platforms.
Security is, of course, another critical aspect of any cryptocurrency investment, and Monochrome has partnered with industry leaders to ensure that IETH meets the highest standards. BitGo, a well-respected crypto financial services firm, and Gemini, a leading cryptocurrency exchange operator, will provide custody services for the ETF’s underlying Ethereum assets. Meanwhile, State Street Australia, a trusted name in the global financial services sector, will serve as the fund’s administrator.
As Monochrome gears up for the launch of IETH, the firm is looking to capitalise on the momentum created by its Bitcoin ETF, which has steadily built a foundation of trust and interest among Australian investors. While it may be tempting to draw comparisons to the larger and more liquid U.S. market, Monochrome’s approach is firmly grounded in addressing the needs of local investors and offering products that are tailored to the unique characteristics of the Australian market.
This Ethereum ETF represents a new chapter for both Monochrome and the broader Australian crypto landscape. With the growing mainstream acceptance of digital assets and the increasing sophistication of the financial products available, ETFs like IETH could pave the way for further innovation in the market. Whether it’s by offering tax-efficient structures, flexible subscription options, or secure custody services, Monochrome is positioning itself as a leader in the next phase of cryptocurrency’s evolution in Australia.
For investors, this new offering provides an opportunity to gain exposure to Ethereum, one of the most prominent and widely used cryptocurrencies, in a regulated and secure environment. The unique features of the IETH ETF, particularly its in-kind subscription and bare trust structure, could be especially appealing to those looking for tax advantages and long-term investment solutions. It’s clear that Monochrome’s strategy is focused on meeting the needs of a growing and diverse pool of investors, and the launch of this ETF is likely to spark further interest in the rapidly evolving world of crypto-backed financial products.
As the first of its kind in Australia, Monochrome’s Ethereum ETF could very well set the stage for future crypto investment options in the country, giving investors access to one of the world’s most important digital assets without the complexities often associated with direct cryptocurrency ownership. With its thoughtful design and investor-friendly features, IETH may serve as a model for other firms looking to offer similar products in the future. For now, though, Monochrome’s focus remains on delivering value and security to its investors, ensuring that they have the tools they need to navigate this exciting new frontier in the financial world.
