As a seasoned analyst with over two decades of experience navigating the ever-evolving financial markets, I find myself genuinely impressed by Monochrome Asset Management’s innovative approach to Ethereum Exchange-Traded Funds (ETFs). The company’s decision to introduce in-kind Ether subscriptions and redemptions, coupled with their unique bare trust structure, is a game-changer that sets them apart from existing Ethereum ETFs listed in the United States and Hong Kong.
Monochrome Asset Management, a prominent Australian financial services firm, is set to create history by unveiling the world’s inaugural Ethereum exchange-traded fund (ETF). This groundbreaking product stands out with its unique in-kind Ether subscription and redemption mechanism, setting it apart from existing Ethereum ETFs listed in the U.S. and Hong Kong.
In an interview with Decrypt, Jeff Yew, CEO of Monochrome, discussed how their new feature streamlines tax efficiency for investors, making it more attractive compared to rival ETFs. This offering is the Monochrome Ethereum ETF (IETH). Notably, it comes equipped with a dual-access bare trust structure aimed at preventing capital gains tax triggers for its users.
A Unique Bare Trust Structure for Tax Benefits
He clarified that the ‘bare trust’ setup positions the investor as if they own the Ethereum in the ETF directly. This means that any actions taken by the trustee are considered as actions of the investor, thereby avoiding capital gains tax events during redemptions or transfers, provided that the beneficial ownership does not change.
With a Monochrome ETF, long-term Ethereum owners can seamlessly move their assets over without altering the legal or beneficial ownership, thereby sidestepping any potential tax consequences.
As a forward-thinking crypto investor, I’m excited about Monochrome Ethereum ETF because it brings unique features that set it apart in global markets. Starting October 15 at 10 AM AEDT, this ETF will be accessible for trading on the Australian branch of the Chicago Board Options Exchange (CBOE).
This product is designed to monitor the CME CF Ether-Dollar Reference Rate. It comes with a management fee that’s initially set at 0.5%, but for accredited advisers, this fee will be lowered to 0.21%. This makes its cost comparable to U.S. offerings, which typically charge fees ranging from 0.20% to 0.25%.
On various Australian brokerage platforms, it’s possible to access the Monochrome ETF. This flexibility enables transfers not only from traditional brokerages but also from cryptocurrency exchanges, decentralized wallets, and secure offline storage options.
Ethereum ETFs Face Challenges in the Market
In addition to choosing BitGo and Gemini as custodians for IETH, Monochrome has appointed State Street Australia as the administrative manager for its funds.
The debut of the Monochrome IETH occurs amidst a period where Ethereum Exchange-Traded Funds (ETFs) are facing difficulty in capturing investor attention, notably less so than Bitcoin ETFs.
Despite being introduced in the U.S. and Hong Kong this year, Ethereum ETFs have experienced a relatively gradual growth in investment. According to SoSoValue’s data, the combined net assets of US-based Ethereum ETFs stand at $6.74 billion, which is substantially lower compared to Bitcoin, with a market cap of $1.27 trillion, 24h volatility of 2.6%, and a 24h volume of $28.88 billion. Since their inception in January, Ethereum ETFs have accumulated a total value of approximately $18.81 billion.
In Hong Kong, Ethereum ETFs hold just $35.07 million, representing a mere 0.07% of Ethereum’s total market value.
Despite encountering hurdles, Monochrome remains hopeful that its established market standing in Australia and the distinctive attributes of its Ethereum ETF will propel it forward. Previously, they introduced a Bitcoin ETF in June 2024, and they anticipate this newest product will solidify their status as a pioneer in crypto investment solutions.
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2024-10-14 12:21