Key Points:
- Monochrome’s Ethereum ETF (IETH) launches on Cboe Australia on Tuesday.
- Unique in-kind Ethereum subscriptions aim to offer tax benefits to investors.
- The ETF will track the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant.
- Custody and fund services will be provided by BitGo, Gemini, and State Street Australia.
Monochrome Unveils Australia’s First Spot Ethereum ETF
https://x.com/BSCNews/status/1845691406003720595
Monochrome Asset Management is set to launch Australia’s first spot Ethereum exchange-traded fund (ETF) on Cboe Australia, further expanding its crypto investment offerings. The ETF, set to begin trading on Tuesday at 10 AM AEDT, aims to offer Australian investors direct exposure to Ethereum. This move follows the success of Monochrome’s Bitcoin ETF (IBTC), which launched in August 2023 and has since attracted $15 million in assets under management.
Monochrome’s new ETF, listed under the ticker IETH, stands out as the world’s first to allow in-kind Ethereum subscriptions and redemptions, a feature designed to provide tax efficiency to investors. This structure enables long-term Ethereum holders to transfer their assets into the ETF without triggering a capital gains tax (CGT) event, preserving their beneficial ownership. Jeff Yew, CEO of Monochrome, emphasized this as a key differentiator from U.S. offerings, which lack similar tax efficiencies.
Competitive Edge Through Tax Efficiency
Monochrome’s ETF is structured using a “bare trust,” a model that allows investors to maintain absolute entitlement to their Ethereum assets. According to Yew, this means that any actions by the trustee, such as transfers or redemptions, are treated as actions by the investor, ensuring that no CGT event occurs as long as beneficial ownership remains intact.
The dual-access bare trust structure is pivotal for Monochrome, as it aims to appeal to sophisticated crypto investors looking to avoid potential tax pitfalls associated with selling and repurchasing their assets. Yew highlighted that U.S. crypto ETFs, including those approved earlier this year, cannot offer in-kind transactions, giving Monochrome a unique edge in the global market.
While the U.S. saw billions of dollars flow into Ethereum ETFs following their approval in May, Monochrome is realistic about the differences in market scale between Australia and the U.S. However, the firm is optimistic that surging interest in digital assets in 2024 will help drive growth in the Australian crypto ETF market.
Global Comparisons and Local Advantage
IETH will track the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, with a competitive management fee of 0.50%, dropping to 0.21% for accredited financial advisers. This pricing is in line with U.S.-based Ethereum ETFs, which typically charge between 0.20% and 0.25%.
The ETF will be accessible through a wide range of Australian brokerage platforms, offering investors the flexibility to transfer assets from crypto exchanges, decentralized wallets, and cold storage solutions. Monochrome has partnered with BitGo and Gemini to provide secure custody services, while State Street Australia will handle fund administration.
Yew noted that the absence of in-kind support for U.S.-based crypto ETFs, combined with the different time zones, provides Monochrome’s Ethereum ETF with a unique position for Australian investors seeking tax efficiency and local market convenience.
With this launch, Monochrome hopes to solidify its position as a leading provider of regulated crypto investment products in Australia, offering both Ethereum and Bitcoin ETFs to a growing market of digital asset enthusiasts.