Monochrome to Launch Australia’s First Spot Ethereum ETF

Highlights:

• Monochrome’s IETH is set to launch on October 14, following its Bitcoin ETF.
• IETH features a bare trust structure, enabling tax-efficient transfers for Ethereum holders.
• The ETF will be available on major Australian platforms and will support various wallet transfers.

Monochrome Asset Management, a leading crypto investment firm, is set to launch Australia’s first spot Ethereum (ETH) exchange-traded fund (ETF). The new ETF, trading under the ticker IETH, will begin on Monday, October 14, on the Cboe exchange. This comes after Monochrome’s successful launch of its Bitcoin ETF (IBTC) in August 2023, which has accumulated $15 million (US$10.1 million) in assets.

JUST IN: MONOCHROME ASSET MANAGEMENT TO LAUNCH AUSTRALIA'S FIRST ETHEREUM SPOT ETF (IETH) ON CBOE, BEGINNING TRADING ON OCT. 14

— BSCN Headlines (@BSCNheadlines) October 14, 2024

The Monochrome Ethereum ETF offers investors a regulated, direct way to invest in Ethereum, the second-largest cryptocurrency by market capitalization. IETH will follow the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, providing a reliable and transparent benchmark for Ethereum’s price.

Monochrome’s ETF distinguishes itself through its in-kind subscription and redemption process, allowing investors to transfer Ethereum into and out of the ETF without triggering a capital gains tax (CGT) event. This feature, known as the bare trust structure, lets long-term Ethereum holders transfer assets while retaining full ownership of their tokens. As long as Ethereum’s legal and beneficial title remains unchanged, no CGT will be incurred. Unlike many other ETFs, Monochrome’s IETH is available to retail and accredited investors. 

In an interview with Decrypt, CEO Jeff Yew provided additional insights on the structure, stating:

“A ‘bare trust’ means that your investment in the ETF may be treated as if you directly own the Ethereum. US crypto ETFs can’t be supported in kind, including Bitcoin ETFs, and they are not operated in this timezone.”

Competing with US ETFs

The Monochrome Ethereum ETF will be available on most Australian brokerage platforms and will support transfers from crypto platforms, decentralized wallets, and cold storage wallets. IETH has a management fee of 0.5%, which is reduced to 0.21% for accredited advisers.

This fee structure aligns it with U.S. competitors, whose fees typically range from 0.20% to 0.25%. Although Ether ETH inflows have significantly declined in the U.S. market, major players like BlackRock remain optimistic. Should overall market demand recover, Monochrome’s IETH could also benefit.

Monochrome Partners with Industry Leaders for Secure ETF Launch

The investment firm has collaborated with leading industry providers to ensure the security and regulatory compliance of the ETF. BitGo, a crypto financial services firm, will serve as the custody provider, safeguarding the Ethereum assets.

Additionally, Gemini, a major crypto exchange operator, will provide supplementary custody services, while State Street Australia will handle fund administration. The launch of Monochrome’s Ethereum ETF aligns with a broader trend in global markets.

This structure is what Monochrome believes will differentiate its offering from its U.S. counterparts. In January, the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs, followed by the approval of nine Ethereum ETFs in May, resulting in billions of dollars flowing into the funds in the subsequent months. Although the Australian market may not match those inflows, Monochrome aims to capitalize on the rising investor interest this year.