Monochrome to Launch First Ethereum ETF on Cboe Australia

• Monochrome launches Australia’s first spot Ethereum ETF on Cboe, offering in-kind transfers.  
• The ETF’s bare trust structure prevents capital gains tax on Ethereum transfers.  
• BitGo, Gemini, and State Street Australia will provide support and custody services.

Monochrome Asset Management will be releasing Australia’s first spot Ethereum exchange-traded funds at the Cboe. This fund, known as IETH, is expected to start trading this Tuesday at 10 am AEDT. The launch comes after Monochrome’s Bitcoin ETF (IBTC), which started trading in August 2023 and has attracted $15 million. Monochrome plans to differentiate its product by targeting investors interested in capital gains.

The Ethereum ETF offers in-kind Ethereum subscriptions and redemptions, which the company hopes will attract long-term crypto investors. Monochrome CEO Jeff Yew explained that this feature allows for greater tax efficiency. The ETF’s dual-access bare trust structure prevents a capital gains tax event when investors transfer Ethereum into the fund. As long as ownership does not change, no tax event occurs. 

In this structure, investors have direct entitlement to Ethereum in the ETF. Yew said that any activities performed by the trustee would be regarded as activities of the investor. This setup helps Monochrome place its ETF in a different category from the US-based funds for which such in-kind transfers are unavailable. Also, Monochrome plans to take advantage of the different time zone of the Australian market from the U.S market.

The IETH ETF will track the CME CF Ether-Dollar Reference Rate for the Asia-Pacific region. The fund will attract a management fee of 0.50%, which is reduced to 0.21% for accredited advisers. This fee range is quite comparable to other similar products in the United States, which cost between 0.20% and 0.25%.

Monochrome’s Ethereum ETF will be available through most Australian brokerage platforms. Investors will also be able to transfer funds from crypto platforms, decentralized wallets, and cold wallets. The company expects this accessibility to broaden its appeal to a wide range of investors.

Monochrome has partnered with leading financial firms to support the ETF. Custody services will be offered by BitGo, a provider of crypto financial services, and Gemini, an operator of a crypto exchange. At the same time, State Street Australia will perform responsibilities of the fund administrator. Monochrome is optimistic that the new ETH ETF will expand on the increasing trend of crypto ETFs around the world.