Essential Highlights:
- Monochrome’s Ethereum ETF (IETH) is set to debut on Cboe Australia this Tuesday.
- Distinctive in-kind Ethereum subscriptions are designed to provide tax advantages for investors.
- The ETF will mirror the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant.
- Custodial and fund services will be managed by BitGo, Gemini, and State Street Australia.
Monochrome Launches Australia’s First Spot Ethereum ETF
https://x.com/BSCNews/status/1845691406003720595
Monochrome Asset Management is gearing up to launch Australia’s inaugural spot Ethereum exchange-traded fund (ETF) on Cboe Australia, expanding its offerings in crypto investments. The ETF is set to commence trading on Tuesday at 10 AM AEDT, aiming to provide Australian investors with direct exposure to Ethereum. This development follows the successful launch of Monochrome’s Bitcoin ETF (IBTC) in August 2023, which has attracted $15 million in assets under management since then.
The newly introduced ETF, under the ticker IETH, is notable for being the world’s first to facilitate in-kind Ethereum subscriptions and redemptions, a structure intended to enhance tax efficiency for investors. This arrangement permits long-term Ethereum holders to transfer their assets into the ETF without incurring a capital gains tax (CGT) event, thereby maintaining their beneficial ownership. Jeff Yew, CEO of Monochrome, pointed out this feature as a significant edge over U.S. offerings, which do not provide similar tax efficiencies.
Gaining an Advantage Through Tax Efficiency
Monochrome’s ETF utilizes a “bare trust” structure, enabling investors to retain full entitlement over their Ethereum assets. Yew explained that this setup means any activities by the trustee, such as transfers or redemptions, are recognized as actions taken by the investor, ensuring that no CGT event occurs as long as beneficial ownership is preserved.
The dual-access bare trust structure is crucial for Monochrome, as it caters to sophisticated crypto investors looking to sidestep potential tax implications associated with selling and repurchasing their assets. Yew emphasized that U.S. crypto ETFs, including those approved earlier this year, do not allow in-kind transactions, giving Monochrome a distinctive advantage in the global market.
Although the U.S. witnessed billions in investments in Ethereum ETFs after their approval in May, Monochrome acknowledges the disparity in market size between Australia and the U.S. Nonetheless, the firm is optimistic that increasing interest in digital assets in 2024 will contribute to growth in the Australian crypto ETF market.
Comparing Global Trends and Local Advantages
IETH will closely follow the CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, featuring a competitive management fee of 0.50%, which drops to 0.21% for accredited financial advisers. This pricing aligns with U.S.-based Ethereum ETFs, which typically charge between 0.20% and 0.25%.
Investors will be able to access the ETF through a variety of Australian brokerage platforms, facilitating the transfer of assets from crypto exchanges, decentralized wallets, and cold storage options. Monochrome has partnered with BitGo and Gemini to ensure secure custody services, while State Street Australia will manage fund administration.
Yew remarked that the lack of in-kind support in U.S.-based crypto ETFs, coupled with differing time zones, positions Monochrome’s Ethereum ETF favorably for Australian investors seeking tax efficiency and convenience within the local market.
With this launch, Monochrome aims to strengthen its status as a premier provider of regulated crypto investment products in Australia, offering both Ethereum and Bitcoin ETFs to a growing digital asset enthusiast community.
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