Key Points
- Monochrome Asset Management is launching Australia’s first spot Ethereum ETF on Cboe Australia.
- The ETF offers tax efficiency and competitive fee rates, distinguishing itself globally by offering in-kind Ethereum subscriptions and redemptions.
Monochrome Asset Management is making strides in Australia’s cryptocurrency investment landscape by launching the nation’s first spot Ethereum [ETH] exchange-traded fund (ETF) on Cboe Australia.
This follows the successful launch of its Bitcoin [BTC] ETF (IBTC) in August 2023, which attracted $15 million in assets. The new Ether ETF (IETH) is designed to provide Australian investors with direct exposure to ETH.
Features of Monochrome’s Ethereum ETF
The Australian fund stands out on a global scale by offering in-kind Ethereum subscriptions and redemptions, despite modest holdings compared to U.S. funds. Jeff Yew, CEO of Monochrome Asset Management, shed light on the unique tax efficiency feature of the IETH in an interview.
He explained that the fund’s dual-access bare trust structure is designed to avoid capital gains tax events, offering a strategic advantage for long-term Ethereum holders. This structure allows investors to transfer their Ethereum into the ETF without a shift in legal and beneficial ownership, which could enhance the tax advantages of in-kind subscriptions and redemptions.
Yew stated, “A ‘bare trust’ means that your investment in the ETF may be treated as if you directly own the Ethereum.” He also noted that their Bitcoin ETF has seen significant growth from people moving their custody points from crypto exchanges into the ETF.
Contrasting Trends and Future Challenges
However, recent U.S. ETF data shows contrasting trends: as of 11th October, Bitcoin ETFs saw significant inflows, with $253.6 million added, while Ethereum ETFs recorded minor outflows of $0.1 million. Despite these trends, industry giants like BlackRock and Fidelity remain optimistic about Ethereum’s potential.
Monochrome aims to tap into the growing local interest in crypto investments, despite the Australian market unlikely to replicate such high inflows. It hopes to expand its presence as investor enthusiasm continues to build. The Monochrome Ethereum ETF (IETH) offers Australian investors broad accessibility through major brokerage platforms, supporting crypto exchange and wallet transfers.
The fees are set at 0.5%, reduced to 0.21% for accredited advisers, which aligns closely with U.S. market rates. Therefore, the IETH is well-positioned for growth and ready to capture any resurgence in market demand.
