Monochrome Set to Launch Australia’s First Spot Ethereum ETF on Cboe

Monochrome Asset Management is on the verge of launching Australia’s first spot Ethereum exchange-traded fund (ETF), which is expected to begin trading on Cboe on Tuesday at 10 AM AEDT. Following the footsteps of its Bitcoin ETF (IBTC) launched in August 2023, the new Ethereum ETF (IETH) positions itself uniquely, aiming to provide enhanced tax efficiencies for long-term investors.

Monochrome’s CEO, Jeff Yew, stated a distinctive feature of the ETF—its in-kind subscription and redemption process, setting it apart from its U.S. counterparts.

The fund’s dual-access bare trust structure is designed to avoid triggering capital gains tax (CGT) events. Investors transferring Ethereum into the Monochrome ETF won’t face a CGT event, as the structure ensures that the beneficial ownership of the asset remains with the investor. This offers tax efficiency and ensures long-term crypto participants can move assets seamlessly.

Unique Offering Compared to U.S. ETFs

The appeal of Monochrome’s IETH also stems from its ability to offer direct entitlement to Ethereum without creating unnecessary tax liabilities. According to the public disclosure statement, this means any action by the trustee is treated as if the investor themselves performed it, ensuring that transfers or redemptions don’t lead to CGT complications.

This is a major departure from U.S. crypto ETFs, which, according to Yew, do not support in-kind subscriptions and are operated in a different timezone. Monochrome hopes this unique structure will distinguish it in the global crypto ETF landscape, even though the Australian market is unlikely to rival the billions flowing into U.S.-based Ethereum ETFs, which gained approval earlier this year.

Broader Market Support

While Monochrome’s Ethereum ETF won’t reach the volumes seen in the U.S., the firm is banking on increased interest from Australian investors. IETH will track the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, with a management fee of 0.50%, reduced to 0.21% for accredited advisors. This positions it competitively with U.S. ETFs, which average between 0.20% and 0.25%.

IETH will be supported by prominent Australian brokerage platforms, allowing for transfers from decentralized wallets and cold storage. Custody services will be provided by BitGo and Gemini, with State Street Australia serving as the fund administrator. This ensures a secure and regulated environment for investors looking to gain exposure to Ethereum.