In a significant advancement for the Australian cryptocurrency landscape, Monochrome Asset Management is set to launch the nation’s first spot Ethereum exchange-traded fund (ETF) on the Cboe exchange. This initiative follows the successful approval of similar financial products in the United States. The Monochrome Ethereum ETF (IETH) is poised to begin trading on Monday, October 14, introducing Australian investors to an innovative method of engaging with cryptocurrency assets.
The announcement was complemented by a private event hosted by Monochrome in Sydney, which included key stakeholders such as service providers and partners. The Monochrome Ethereum ETF will be widely available through most Australian brokerage platforms, with the added flexibility of supporting transfers from various crypto platforms, decentralized wallets, and cold storage options. The ETF is designed to track the CME CF Ether-Dollar Reference Rate, mirroring the operations of its U.S. counterparts while featuring an attractive management fee of 0.5%. Notably, accredited advisers will benefit from a reduced rate of 0.21%, enhancing the product’s appeal.
Monochrome’s previous success with a spot Bitcoin ETF, which raised $15 million since its launch in June, sets a favorable precedent, even though it pales in comparison to the investment figures observed in the U.S. market. The company has been meticulously preparing for the launch of the IETH since September, citing a distinct structure that differentiates it from international offerings.
One of the standout features of the Monochrome Ethereum ETF is its dual-access bare trust structure, which allows for in-kind Ethereum subscriptions and redemptions. This innovative approach can potentially provide considerable tax advantages for investors, a unique aspect highlighted by CEO Jeff Yew. By utilizing a ‘bare trust,’ investors are essentially regarded as direct owners of the Ethereum within the ETF, which could provide favorable tax treatment compared to existing U.S. crypto ETFs that lack similar structures.
This tax-efficient design means that investors can transfer Ethereum into the ETF without changing ownership, thereby avoiding immediate capital gains tax liabilities. Moreover, the structure ensures that investors maintain absolute entitlement to their Ethereum holdings, protecting them from capital gains tax during setting transfers or redemptions, as long as their ownership remains constant.
The launch of the Monochrome Ethereum ETF marks a pivotal moment in the Australian crypto market, presenting an opportunity for retail and institutional investors to diversify into one of the most prominent cryptocurrencies without the complexities often associated with direct ownership. As the market continues to evolve, and with further regulatory clarity on cryptocurrency investments, Australia stands at the forefront of innovative financial products that could reshape how investors interact with digital assets. Looking ahead, it will be crucial for Monochrome and similar firms to sustain momentum by enhancing investor education and ensuring transparency in their offerings to foster trust and capitalize on the growing interest in cryptocurrencies.