Monochrome to Launch Australia’s First Spot Ether ETF
Monochrome Asset Management is set to make waves in Australia’s cryptocurrency market with the launch of the country’s first spot Ethereum exchange-traded fund (ETF). The new Ethereum ETF will debut on Cboe Australia on Tuesday, October 15, under the ticker IETH. This follows Monochrome’s earlier success with its spot Bitcoin ETF, IBTC, which was launched in August.
IETH: Australia’s First Spot Ethereum ETF
A New Opportunity for Retail Investors
The introduction of Monochrome’s spot Ethereum ETF marks a significant step forward for cryptocurrency adoption in Australia. The fund will provide retail investors with a regulated and secure way to gain exposure to Ether, the second-largest cryptocurrency in the world by market capitalization. With Ethereum currently boasting a market cap of over $316 billion, the new ETF allows investors to access the asset directly through a regulated product without needing to hold or manage Ether themselves.
IETH: Key Features of the Ethereum ETF
Monochrome’s Ethereum ETF, IETH, will operate as a passive fund that holds Ether as its underlying asset. This means that the ETF will mirror the performance of Ether in the cryptocurrency market, providing investors with an easy, regulated entry point into the world of Ethereum. The fund will also be structured as a dual-access vehicle, offering both cash and in-kind redemptions.
This flexibility allows investors to either buy into the fund with cash or redeem their shares in Ether, depending on their preference. This dual-access structure is particularly beneficial for investors who may wish to convert their holdings into the actual cryptocurrency instead of cashing out into fiat money.
Strategic Partnerships and Custody Providers
To ensure the security and smooth operation of the ETF, Monochrome has partnered with several key players in the crypto and financial services industries. State Street Australia will act as the fund’s administrator, while custody services for the digital assets will be provided by BitGo, a leading digital assets custody provider, and Gemini, a well-known cryptocurrency exchange.
These partnerships ensure that the fund is not only regulated but also securely managed, which can provide peace of mind for investors who may be cautious about investing in cryptocurrencies through traditional channels.
Monochrome’s Growing Presence in the Crypto Market
Following the Success of Monochrome’s Bitcoin ETF
The launch of IETH comes just a few months after Monochrome successfully introduced its spot Bitcoin ETF, IBTC, to the Australian market. The IBTC fund launched in August and has since held approximately 167 Bitcoin, valued at AUD 15 million at the time of launch. The success of the Bitcoin ETF has likely paved the way for the Ethereum ETF, demonstrating strong demand for spot crypto products in Australia.
Regulatory Milestones
Monochrome’s journey to launching Australia’s first spot Ethereum ETF began with an application filed in early September. Partnering with Vasco Trustees Limited, the firm submitted its request for the listing of IETH on Cboe Australia. The approval of the application signals the continued growth of the cryptocurrency ETF market in Australia, which, while still smaller than markets in other countries, is beginning to gain traction.
Monochrome’s IETH will be the first of its kind in Australia, following similar spot crypto ETF launches in other markets, including the United States and Hong Kong. With regulated crypto products now available in multiple countries, the global trend towards mainstream cryptocurrency adoption is accelerating.
The Global Spot Crypto ETF Landscape
The U.S. Market: Leading the Way
While Monochrome is pioneering the spot crypto ETF market in Australia, the United States has already seen significant activity in this space. The U.S. Securities and Exchange Commission (SEC) approved the first spot cryptocurrency ETFs in January 2024. Major financial institutions like BlackRock, Fidelity Investments, and Grayscale received approval for their spot Bitcoin ETFs, which began trading earlier this year.
The SEC later extended its approval to spot Ethereum ETFs in May, with trading going live in July 2024. These approvals marked a major turning point in the regulation and accessibility of cryptocurrencies in the U.S., signaling a broader acceptance of digital assets in mainstream financial markets.
Growth in Demand for Spot Crypto ETFs
Since their launch, spot crypto ETFs in the U.S. have experienced substantial growth in demand. According to data from ETF tracking site SoSoValue, as of October 11, 2024, the total net assets in U.S.-listed spot Bitcoin ETFs amounted to $58.66 billion. Meanwhile, Ethereum ETFs have attracted $6.74 billion in assets, reflecting the growing interest in these products.
This rapid growth in the U.S. market contrasts with the relatively smaller size of assets held in similar funds in countries like Australia. However, as Monochrome’s new Ethereum ETF launches, there is potential for increased interest and investment in cryptocurrency ETFs in Australia.
International Markets: Hong Kong and Beyond
In addition to the U.S., other countries have also started to greenlight spot crypto ETFs. Hong Kong, for example, has recently approved the launch of its own spot cryptocurrency ETFs, following similar steps taken by Australia. These developments are part of a broader global trend of governments and regulators warming to the idea of regulated crypto products, providing investors with safer and more transparent ways to invest in digital assets.
What Does This Mean for Australian Investors?
A New Avenue for Diversification
For Australian investors, the launch of Monochrome’s Ethereum ETF provides a new avenue for portfolio diversification. As cryptocurrencies continue to gain traction globally, having access to a regulated product that tracks the performance of Ether offers investors a way to gain exposure to this rapidly evolving asset class without the need for direct cryptocurrency management.
The IETH fund, with its passive investment strategy, is ideal for those who want to invest in Ethereum without actively trading or holding the underlying asset. The ability to redeem shares in either cash or Ether adds an extra layer of flexibility, catering to a wide range of investor preferences.
The Importance of Regulation
One of the key benefits of Monochrome’s Ethereum ETF is that it offers a regulated way to invest in cryptocurrencies. For many investors, the lack of regulation and oversight in the cryptocurrency market has been a significant barrier to entry. However, with products like IETH, retail investors can gain exposure to digital assets within a familiar and regulated framework, reducing the perceived risk of cryptocurrency investments.
Monochrome’s launch of Australia’s first spot Ethereum ETF, IETH, represents a milestone in the country’s financial markets. Following the success of its spot Bitcoin ETF, Monochrome is set to continue leading the charge for regulated cryptocurrency products in Australia. As global demand for spot crypto ETFs rises, the introduction of IETH provides Australian investors with a new opportunity to invest in Ethereum through a secure and regulated product. With the global cryptocurrency ETF market expanding rapidly, IETH is positioned to play a key role in the future of crypto investment in Australia.
