Monochrome Prepares to Launch Australia’s First Spot Ethereum ETF

Monochrome Asset Management is set to launch Australia's first spot Ethereum exchange-traded fund (ETF) on Cboe, marking a significant development following the asset’s recent approval in the U.S. market. Trading is expected to commence on Monday (Tuesday at 10 AM AEDT) under the ticker IETH.

Unique Structure Aims for Tax Efficiency

What sets Monochrome’s offering apart is its in-kind subscription and redemption feature, designed to give investors more efficient tax options. CEO Jeff Yew explained that the dual-access bare trust structure is intended to avoid triggering capital gains tax (CGT) events.

This setup allows long-term investors to transfer their Ethereum into the ETF without a change in legal ownership, positioning the fund as a first in the global market for this kind of structure.

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Competing on a Global Stage

Although Monochrome’s Bitcoin ETF, launched in August 2023, has raised $15 million, it pales in comparison to the billions flowing into U.S.-based funds. Nevertheless, Yew remains optimistic, pointing out that U.S. crypto ETFs, including Bitcoin and Ethereum ETFs, lack the in-kind feature and don’t operate within the Asia-Pacific time zone, which could give Monochrome a competitive edge in its region.

Tracking and Fees

IETH will track the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant. The management fee stands at 0.50%, but accredited advisers will receive a reduced rate of 0.21%, making it competitive with similar offerings in the U.S. market, where fees range from 0.20% to 0.25%.

Wider Accessibility and Trusted Custody

Available on Australian brokerage platforms, the ETF will support transfers from various sources, including decentralized wallets and crypto platforms. Custody services will be provided by BitGo and Gemini, while State Street Australia will act as fund administrator, ensuring secure management.

While Monochrome's Ethereum ETF offers innovative features, it faces stiff competition from larger U.S. funds. It remains to be seen whether the unique structure will be enough to capture substantial market interest.