Monochrome Announces First-of-Its-Kind Ethereum ETF to be Launched on Cboe Australia – Decrypt

Monochrome Asset Management is gearing up to launch Australia’s inaugural spot Ethereum exchange-traded fund on Cboe after the asset’s much-awaited approval in the U.S. market.

Scheduled to go live on Monday (Tuesday 10 AM AEDT), Monochrome’s Ethereum ETF (IETH) comes on the heels of its Bitcoin ETF (IBTC) debut in August 2023, which has amassed $15 million (US$10.1 million) in assets since its inception. 

While this figure pales in comparison to the billions housed in American ETFs, Monochrome’s offering intends to be the first globally to facilitate in-kind Ethereum subscriptions and redemptions.

This unique feature could potentially enhance tax efficiencies, as CEO Jeff Yew discussed in an exclusive interview with Decrypt.

The dual-access bare trust model is crafted to avoid a capital gains tax event, enabling long-time crypto investors to transfer Ethereum to the corresponding Monochrome ETF without triggering a change of legal or beneficial ownership title.

“A ‘bare trust’ means that your investment in the ETF might be treated as if you directly own the Ethereum,” Yew elaborated.

In essence, this configuration grants investors absolute entitlement to their designated Ethereum amount, as per the fund’s public disclosure statement shared with Decrypt.

Thus, any actions conducted by the trustee are deemed actions of the investor, guaranteeing that no CGT event occurs upon redemption or transfer, as long as beneficial ownership remains constant.

This distinctive structure is the hallmark that Monochrome hopes distinguishes its offering from its U.S. counterparts.

In January, the U.S. Securities and Exchange Commission authorized 11 spot Bitcoin ETFs. Subsequently, nine Ethereum ETFs gained approval in May, drawing billions of dollars into these funds in the ensuing months. 

Although the Australian market is unlikely to reach these levels of inflow, Monochrome aims to capitalize on the soaring investor interest this year.

“U.S. crypto ETFs cannot be supported in kind, including Bitcoin ETFs, and they do not operate in this timezone,” Yew remarked.

IETH will monitor the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, with a management fee of 0.50%, reduced to 0.21% for accredited advisers. This positions it in line with its U.S. competitors, who offer an average management fee of 0.20% to 0.25%.

The ETF will be accessible on most Australian brokerage platforms, facilitating transfers from crypto platforms, decentralized wallets, and cold wallets. 

Crypto financial services company BitGo and crypto exchange operator Gemini will offer custody services for IETH, while State Street Australia assumes the role of fund administrator.