Monochrome Asset Management is preparing to launch Australia's first-ever Ethereum exchange-traded fund on Cboe following its long-awaited asset listing in the US market.
The Monochrome Ethereum ETF (IETH), which is set to begin trading on Monday (Tuesday 10 AM AEDT), has gained $US15 million ($10.1 million), following the August 2023 launch of the Bitcoin ETF (IBTC).
While that pales in comparison to the billions held in the US, the fund is positioning itself as the first in the world to offer one-of-a-kind Ethereum subscriptions and redemptions.
It's a feature that allows for greater tax efficiency,” CEO Jeff Yu told Decrypt in an exclusive interview.
The dual-access void trust structure is designed to avoid capital gains tax incidence and allows long-term crypto participants to transfer Ethereum to the corresponding Monochrome ETF without triggering a legal and beneficial title change.
“A ‘bare trust' means that your investment in the ETF can be treated as if you directly own Ethereum,” explained Yew.
In other words, the structure gives investors absolute rights to their allocated Ethereum, according to the fund's official statement shared with Decrypt.
This means that any actions taken by the trustee are treated as the investor, ensuring that no CGT event is triggered on redemption or transfer unless beneficial ownership changes.
This structure is what Monochrom hopes will set its offering apart from its US counterparts.
In January, the US Securities and Exchange Commission approved 11 spot Bitcoin ETFs. That was followed by the approval of nine Ethereum ETFs in May, with billions of dollars flowing into funds in the coming months.
Although the Australian market may not match those revenues, Monochrom hopes to build on rising investor interest this year.
“US crypto ETFs, including Bitcoin ETFs, cannot be backed in kind and will not operate in this time zone,” Yew said.
IETH CME CF Ether-Dollar Reference Rate – Asia Pacific Variant, management fee 0.50%, reduced to 0.21% for accredited advisors. That puts it in the range of its US competitors, offering an average of 0.20% and 0.25%.
The EFA will be supported by most Australian brokerage platforms, including crypto platforms, decentralized wallets and cold wallets.
Crypto financial services firm Bitgo and crypto exchange operator Gemini will provide custodian services to IETH, while State Street Australia will act as fund manager.
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