Despite low demand for the Spot Ethereum ETF in the first three months after its launch in the US, Australia's Monochrome Asset Management is preparing for a similar launch in its home country. Interestingly, the Monochrome Ethereum ETF has a twist that could revive demand for this investment product.
Monochrome Ethereum ETF begins operation on CBOE
Monochrome Ethereum Exchange Traded Fund (IETH) will begin trading on the Australian Cboe Exchange on Monday, October 14th. The launch comes less than four months after the asset manager introduced the Spot Bitcoin ETF to Australian investors in June this year.
Unlike U.S.-listed Ether ETFs, the Monochrome Ethereum ETF positions itself as the world's first Ether ETF to offer in-kind Ether subscriptions and redemptions. Monochrome CEO Jeff Yu said this feature could lead to greater tax savings for investors.
These Ethereum ETFs from Monochrome come with a dual-access bare trust structure aimed at preventing capital gains tax events for long-term holders of the cryptocurrency. This innovative structure allows participants to transfer Ethereum to the ETF without causing a change in legal or beneficial ownership. Therefore, it helps investors avoid immediate tax burden. Monochrome has been preparing for the launch of the Ether ETF since September.
Furthermore, this new structure of Monochrome gives investors absolute rights to their allocated Ethereum. As a result, any action from the trustee becomes part of the investor's actions to prevent the imposition of capital gains tax on transfer or redemption as long as ownership remains the same. Monochrome believes this will set its Ethereum ETF apart from U.S. ETFs.
“'Bear Trust' means that an investment in an ETF is treated as if it directly owns Ethereum. Crypto ETFs in the US can be physically backed, including Bitcoin ETFs. “It does not operate in this time zone,” Yu explains in a nutshell at Decrypt.
Competition with US ETFs
Monochrome Ethereum ETF (IETH) is accessible through most intermediary platforms in Australia and supports transfers from crypto platforms, decentralized wallets, and cold storage wallets.
Additionally, IETH also follows the CME CF Ethereum Reference Rate and has a 0.5% management fee, which is reduced to 0.21% for certified advisors. Therefore, this pricing structure is in line with our U.S. competitors, who offer fees ranging from 0.20% to 0.25% on average.
Monochrome brings together top market players such as BitGo and Gemini to provide crypto custody to IETH. Meanwhile, State Street Australia will act as the ETF's fund manager.
Although Ether ETH inflows have decreased significantly in the US market, major companies like BlackRock are still hopeful. Monochrome's IETH will also benefit if market-wide demand recovers.
Bhushan Akolkar
Bhushan is a FinTech enthusiast with a deep understanding of financial markets. His interest in economics and finance led him to focus on the emerging blockchain technology and cryptocurrency market. He is passionate about continuous learning and stays motivated by sharing the knowledge he gains. In his free time, Bhushan enjoys reading thriller fiction novels and sometimes hones his cooking skills.
Disclaimer: The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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