Monochrome launches ‘world’s first’ Ethereum ETF at Cboe Australia

Monochrome Asset Management is preparing to launch Australia’s first Ethereum exchange-traded fund on Cboe following the asset’s long-awaited approval in the US market.

Monochrome’s Ethereum ETF (IETH), which is scheduled to begin trading on Monday (Tuesday 10am AEDT), has raised $US15 million (US$10.1 million) since the launch of the Bitcoin ETF (IBTC) in August 2023.

Although this is far short of the billions of dollars held by the United States, the fund positions itself as the first fund in the world to offer in-kind Ethereum subscriptions and redemptions.

CEO Jeff Yew said this was a feature that could increase tax efficiency. decryption In an exclusive interview.

The dual-access simple trust structure is designed to prevent capital gains tax events, allowing long-term cryptocurrency participants to transfer Ethereum to the corresponding Monochrome ETF without changing legal and beneficial ownership.

“‘Sheer trust’ means that an investment in an ETF can be treated as if you own Ethereum directly,” Yew explained.

In other words, this structure gives investors absolute rights to their allocated Ethereum. decryption.

This means that any action taken by the trustee will be treated as an action by the investor, ensuring that no CGT event occurs on redemption or transfer unless beneficial ownership changes.

This structure is what Monochrome hopes will set it apart from its American counterparts.

Last January, the U.S. Securities and Exchange Commission approved 11 spot Bitcoin ETFs. Then in May, nine Ethereum ETFs were approved, bringing billions of dollars into funds in the months that followed.

It’s unlikely the Australian market can keep up with this influx, but Monochrome is hoping to build on surging investor interest this year.

“U.S. cryptocurrency ETFs, including the Bitcoin ETF, do not have in-kind support and do not operate in this time frame,” Yew said.

IETH tracks the CME CF Ether-Dollar benchmark rate (Asia Pacific variant) with a management fee of 0.50%, reduced to 0.21% for accredited advisors. This puts it well within the range of its US competitors, which offer an average of 0.20% and 0.25%.

The ETF is also available on most Australian brokerage platforms and supports transfers from cryptocurrency platforms, decentralized wallets and cold wallets.

Cryptocurrency financial services company BitGo and cryptocurrency exchange operator Gemini will provide custody services for IETH, while State Street Australia will act as fund manager.