- Monochrome offers a tax-efficient in-kind Ethereum ETF, which is unique among worldwide ETFs.
- Dual-access bare trust structure prevents capital gains tax for long-term investors.
Despite not much demand for spot Ether ETFs in the United States, Australia’s Monochrome Asset Management is introducing a new product with a unique twist. The Monochrome Ethereum exchange-traded fund (IETH) will go live on the Australia Cboe platform on Monday, October 14. The debut comes just four months after the asset manager introduced a spot Bitcoin ETF to Australian users in June.
The Monochrome Ethereum ETF claims to be the world’s first to offer in-kind Ether subscriptions and redemptions. This sets it apart from US-listed Ether ETFs. Monochrome CEO Jeff Yew highlighted that this functionality could result in significant tax savings, especially for long-term cryptocurrency investors.
The Monochrome Ethereum ETF stands out for its dual-access bare trust structure, which is intended to protect long-term investors from capital gains tax. This structure allows users to transfer Ethereum into the ETF without altering legal or beneficial ownership. As a result, they can avoid immediate tax consequences.
Investors retain 100% entitlement to their allotted Ethereum, which means that the trustee’s actions will not result in a capital gains tax event during transfers or redemptions as long as ownership stays constant.
Monochrome says that its unique structure distinguishes its Ethereum ETF from its US counterparts, which do not allow in-kind transactions. According to Yew, a bare trust allows your investment in the ETF to be managed as if you directly own Ethereum. This structure simplifies the investment process and enhances ownership benefits. US crypto ETFs, including Bitcoin ETFs, are not supported in kind and cannot operate in this timezone.
Competitive Advantage and Market Access
The Monochrome Ethereum ETF (IETH) will be available on most Australian brokerage platforms. It will also support transfers from cryptocurrency exchanges, decentralized wallets, and cold storage. It incorporates the CME CF Ether-Dollar Reference Rate, ensuring a reliable valuation. The ETF charges a management fee of 0.5%, which is competitive with US counterparts. Accredited advisers benefit from a reduced fee of 0.21%.
Top market companies, including BitGo and Gemini, will provide crypto custody for IETH, while State Street Australia will serve as the fund administrator. Despite the current lower demand for Ether ETFs in the United States, Monochrome maintains a bullish outlook. The company sees potential for growth as market conditions improve. They believe there is ample room for expansion in the future.
As of the time of writing, the IETH is trading at $0.1195 and has grown by 2.36%. Monochrome’s expansion into Ethereum ETFs, following the success of its Bitcoin ETF, demonstrates a growing desire for crypto investments that provide institutional-grade security and efficiency to Australian investors.
