Monochrome unveils innovative Ethereum ETF offering tax benefits to investors

• Monochrome Asset Management deploys Australia’s first spot Ethereum ETF, IETH, on Cboe.

• The ETF offers in-kind Ethereum subscriptions and redemptions.

Monochrome Asset Management is set to launch Australia’s first cash Ethereum exchange-traded fund (ETF) on Cboe, marking a significant milestone for the country’s crypto-currency market. The fund, known as IETH, will begin trading on Monday following asset approval in the US, where Ethereum ETFs have already seen substantial inflows.

Monochrome Asset Management is preparing to launch Australia's first Ethereum spot ETF (IETH) on Cboe, which will begin trading on Monday. The fund will position itself as the world's first fund to provide physical Ethereum subscription and redemption. Previously in June,…

— Wu Blockchain (@WuBlockchain) October 14, 2024

Since the launch of Monochrome’s Bitcoin ETF (IBTC) in August 2023, which has now raised $15 million in capital, the Ethereum ETF has been poised to tap into investor interest in crypto-currencies. While this still falls short of the billions in the US market, Monochrome hopes to set itself apart by offering a special feature: in-kind subscriptions and redemptions for Ethereum.

According to Monochrome CEO Jeff Yew, this feature improves tax management through a simple dual-access trust structure. Investors can transfer Ethereum into the ETF without any impact on CGT, as legal ownership does not change. This structure may be of interest to current Ethereum holders looking to optimize their tax position.

a bare trust means that your investment in the ETF can be treated as if you owned the Ethereum directly,” said Yew.

This allows investors to hold Ethereum directly in the ETF, unlike other similar products available on the global market, which offer investors mere exposure to the underlying Ethereum.

Australia’s growing crypto ETF market

Monochrome’s Ethereum ETF is not the only crypto-currency ETF in Australia. More and more ETFs are being launched in the country. DigitalX was one of the first companies to market its Bitcoin ETF in 2023, and the Perth-based company is currently working on launching its own Bitcoin spot ETF on the Australian Securities Exchange (ASX). DigitalX thus becomes the second Bitcoin ETF on the ASX following that launched by VanEck in June this year.

These developments indicate a growing demand for compliant crypto investment products, as more and more Australians look to invest in digital assets within their diversified investment portfolios. The IETH ETF will be based on the CME CF Ether-Dollar – Asia Pacific Edition reference rate. Management fees are 0.50% of assets under management, but only 0.21% for accredited advisors. This puts it in a competitive range, in line with US funds, which typically offer fees of between 0.20% and 0.25%.

Institutional partnerships strengthen IETH fund management

All IETH fund assets will be managed with the help of Monochrome’s partners BitGo and Gemini. In addition, State Street Australia will be the fund’s administrator, meaning they will provide key operational functions for the ETF.

The Ethereum ETF will be available on most Australian exchanges and will accept transfers from other crypto-currency exchanges, decentralized wallets and cold wallet storage. This flexibility ensures that the system can also be used by anyone, from retail customers to institutional investors.

Charles Schwab recently published a report indicating that 48% of US investors plan to invest in crypto-currency ETFs over the next year, demonstrating the growing demand for these products on a global scale. Monochrome aims to capture a share of this interest as the Australian market develops.