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Monochrome has broken new ground with the planned launch of world’s first Ethereum ETF featuring in-kind redemptions, offering unique tax advantages for long-term holders.
Key Notes
Monochrome asset management is launching the world's first Ethereum ETF featuring in-kind redemption and subscription.The product will start trading on Tuesday, October 15 on CBOE Australia.Monochrome’s Ethereum ETF introduces a bare trust structure, ensuring tax-efficient redemptions without triggering capital gains events.Despite lukewarm global interest in Ethereum ETFs, Monochrome is betting on its unique features to capture market share in Australia.Monochrome Asset Management, a leading financial services company based in Australia, has made history with the planned launch of the world’s first Ethereum exchange-traded fund (ETF) that features in-kind Ether subscriptions and redemptions. This innovative design distinguishes the product from other Ethereum ETH $2 522 24h volatility: 2.4% Market cap: $303.92 B Vol. 24h: $13.45 B ETFs listed in the United States and Hong Kong.
In an interview with Decrypt, Monochrome CEO Jeff Yew explained that this feature enhances tax efficiencies for investors, offering a major advantage over competing ETFs. The product, known as the Monochrome Ethereum ETF (IETH), also includes a dual-access bare trust structure designed to prevent capital gains tax events for participants.
A Unique Bare Trust Structure for Tax Benefits
Yew elaborated that the ‘bare trust’ structure effectively treats the investor as the direct owner of the Ethereum held in the ETF. “It ensures that actions by the trustee are regarded as actions of the investor, so no capital gains tax event occurs during redemptions or transfers as long as beneficial ownership remains unchanged,” he explained.
The ETF allows long-term Ethereum holders to transfer their assets into the Monochrome ETF without triggering changes in legal and beneficial ownership, avoiding tax implications.
Monochrome believes these features, which are absent in other Ethereum ETFs, will give it a competitive edge in global markets. Beginning October 15 at 10 AM AEDT, the ETF will be available for trading on the Australian arm of the Chicago Board Options Exchange (CBOE).
The product will track the CME CF Ether-Dollar Reference Rate and carry a management fee of 0.5%, which will be reduced to 0.21% for accredited advisers, making it comparable to US offerings, which charge fees between 0.20% and 0.25%.
The Monochrome’s ETF will also be accessible through multiple brokerage platforms across Australia, supporting transfers from crypto exchanges, decentralized wallets, and cold storage options.
Ethereum ETFs Face Challenges in the Market
Monochrome has also selected BitGo and Gemini as custodians of IETH. The company has also named State Street Australia as the fund administrator.
The launch of the Monochrome IETH comes at a time when Ethereum ETFs are struggling to attract investor interest, particularly compared to Bitcoin ETFs.
Since their launch in the US and Hong Kong earlier this year, Ethereum ETFs have seen a slow uptake. Data from SoSoValue shows that the US-based Ethereum ETFs hold total net assets of $6.74 billion, significantly trailing Bitcoin BTC $64 377 24h volatility: 2.5% Market cap: $1.27 T Vol. 24h: $28.14 B ETFs, which have amassed a total pay of $18.81 billion since January.
In Hong Kong, Ethereum ETFs hold just $35.07 million, representing a mere 0.07% of Ethereum’s total market value.
Despite these challenges, Monochrome is optimistic that its market reputation in Australia, alongside the innovative features of its Ethereum ETF, will help it gain traction. The company previously launched a Bitcoin ETF in June 2024 and hopes that this latest product will cement its position as a leader in crypto investment offerings.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
