It would offer in-kind Ethereum subscriptions and redemptions—a feature absent in U.S. crypto ETFs.
- Monochrome’s Ethereum ETF (IETH) launches, offering Australia’s first-in-kind ETH subscriptions. IETH provides tax efficiency with a bare trust structure and competitive fee rates.
Monochrome Asset Management is set to debut Australia’s first spot Ethereum [ETH] exchange-traded fund (ETF) on Cboe Australia, marking a major step in the nation’s cryptocurrency investment landscape.
Building on the success of its Bitcoin [BTC] ETF (IBTC) launched in August 2023—which has already attracted $15 million in assets—Monochrome’s new Ether ETF (IETH) aims to provide Australian investors with direct exposure to ETH.
For those unaware, on 5th September, the asset manager filed an application hoping to secure approval by month’s end.
Fortunately, after a swift approval process unlike the recent regulatory movements in the U.S., the IETH trading is set to commence on 14th October.
How is Monochrome’s Ethereum ETF different from the US?
Though modest compared to U.S. funds with billions in holdings, the Australian fund distinguishes itself globally by offering in-kind Ethereum subscriptions and redemptions.
Providing further insights on the same, Jeff Yew, CEO of Monochrome Asset Management, highlighted a unique tax efficiency feature of the IETH in an exclusive interview with a publication.
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 enables investors to transfer their Ethereum into the ETF without a shift in legal and beneficial ownership, potentially enhancing the tax advantages of in-kind subscriptions and redemptions.
Yew added,
“A ‘bare trust’ means that your investment in the ETF may be treated as if you directly own the Ethereum.”
In fact, when IBTC gained momentum with its ETF in-kind subscription model, Yew said,
“We are starting to see an interesting pattern with our Bitcoin ETF; people are moving their custody points from crypto exchanges into the ETF; that’s actually where we are seeing the biggest growth from.”
That being said, recent U.S. ETF data reveals 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 contrasting trends, industry giants such as BlackRock and Fidelity maintain optimism for Ethereum’s potential.
Challenges ahead
Although the Australian market is unlikely to replicate such high inflows, Monochrome aims to tap into the growing local interest in crypto investments, hoping to expand its presence as investor enthusiasm continues to build this year.
“US crypto ETFs can’t be supported in kind, including Bitcoin ETFs, and they are not operated in this timezone.”
In conclusion, the Monochrome Ethereum ETF (IETH) would offer Australian investors broad accessibility through major brokerage platforms, supporting crypto exchange and wallet transfers.
With fees set at 0.5%, reduced to 0.21% for accredited advisers, it aligns closely with U.S. market rates, i.e. 0.20%- 0.25%.
Hence, positioned for growth, IETH is well-prepared to capture any resurgence in market demand.
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