Monochrome prepares to launch Australia’s first Ethereum spot ETF on CBOE

Asset management firm Monochrome is preparing to launch an Ethereum ETF on the Chicago Board Options Exchange (CBOE). The ETF is expected to begin trading on Monday, October 14. 

Australia’s investment firm Monochrome is planning to enter the Ethereum exchange-traded funds market with a twist. The asset management firm plans to launch Australia’s first Ethereum spot ETF on the CBOE exchange. The firm labels its Ethereum ETF with the ticker symbol IETH. Monochrome believes IETH is the first ETF to offer in-kind Ethereum subscriptions and redemptions to investors.

Monochrome prepares for a unique Ethereum ETF debut

Monochrome hosted a private event in Sydney this week with our service providers, team, and partners to mark the upcoming launch of the Monochrome Ethereum ETF (Ticker: IETH).#Ethereum #ETF $IETH pic.twitter.com/VAPOgZcPGr

— Monochrome (@MonochromeAsset) October 10, 2024

According to the firm’s CEO, Jeff Yew, the in-kind Ethereum subscriptions and redemptions feature accrues possible tax efficiencies that could make the ETF more advantageous and competitive. He stated, the ETF is based on the dual-access bare trust structure, which will protect investors from capital gains taxes. 

Investors will be able to transfer Ethereum into the ETF without altering any legal and beneficial ownership. The bare trust structure means the Ethereum investment in the ETF may be treated as though the investors directly own the asset. 

Any actions by the trustee will be termed the actions of the investor, unlike other ETFs whose trustee and investor actions are independent. Therefore, the capital gains tax will not apply as long as the ownership remains unchanged. The feature distances Monochrome’s IETH from US-approved Ethereum ETFs.

IETH ETF will trail the CME CF Ether-Dollar Reference Rate—Asia Pacific Variant. The fund will charge a management fee of 0.50% for non-accredited investors and 0.21% for accredited advisers. The fees place the fund within the range of what US competitors offer (0.20% and 0.25%).

IETH to contract BitGo and Gemini for custody services

Crypto financial firm BitGo and crypto exchange operator Gemini will facilitate custody services for IETH. On the other hand, State Street Australia will serve as the fund administrator. Monochrome filed for the ETF listing with CBOE Australia in early September. 

US spot Ethereum ETFs have experienced poor demand since the beginning of October. On Friday, October 11th, the funds witnessed daily net outflows worth $97.11k. BlackRock’s ETHA, listed on the NASDAQ exchange, currently leads the global Ethereum ETF market with net assets worth $1.02 billion. 

Likely, Australian-listed ETFs will not outperform the US market. However, Yew believes that the Australian time zone and IETH’s in-kind features make it more favorable for Australian investors. He said, “US crypto ETFs can’t be supported in kind, including Bitcoin ETFs, and they are not operated in this timezone.”

The asset management firm also launched a Bitcoin ETF in August 2023. Monochrome’s Bitcoin ETF IBTC has received inflows worth more than $10 million since then. On the other hand, US Bitcoin ETFs have cumulatively received net inflows worth $18.81 billion. BlackRock’s fund also leads Bitcoin ETFs with net assets worth $23.30 billion as of October 11th.