Australia is gearing up for the launch of its first-ever spot Bitcoin exchange-traded fund (ETF) that directly holds the asset. The Monochrome Bitcoin ETF (IBTC) is scheduled to start trading on the Cboe Australia exchange on Tuesday, June 4.
While there are already existing exchange-traded products offering exposure to Bitcoin in Australia, Monochrome Asset Management has become the pioneer in receiving approval under a new crypto asset licensing category introduced in the Australian Financial Services (AFS) licensing regulations of 2021. This unique license enables the ETF to directly hold Bitcoin (BTC). Monochrome has emphasized that IBTC’s holdings are securely stored offline on a device disconnected from the internet and comply with Australian institutional custody regulatory standards.
Until now, Australian investors only had access to ETFs that indirectly held Bitcoin or offshore Bitcoin products. These options did not benefit from the investor protection regulations provided under the directly held crypto asset AFS licensing regime, as highlighted by Monochrome.
In contrast to US counterparts that are cash-based, the IBTC ETF allows for in-kind redemption from investors. Monochrome’s CEO, Jeff Yew, expressed confidence in the strong interest that the ETF is expected to generate, given the steady growth of indirect Bitcoin ETF products in recent times. He also disclosed plans to develop and launch an Ether (ETH) ETF, which would follow the same direct asset-holding model.
Looking ahead, Yew mentioned that the company is exploring various thematic opportunities within the digital asset sector to cater to investor demand. The launch of IBTC in Australia coincides with the recent introduction of four spot Bitcoin ETFs in Hong Kong, where three out of four have witnessed cumulative net outflows since their inception.
In comparison, US Bitcoin ETFs have seen more positive results, with a cumulative inflow of $13.9 billion, offset by outflows from the Grayscale Bitcoin Trust. Yew believes that Australia’s crypto-friendly environment will drive local spot Bitcoin ETFs to attract between $3 billion to $4 billion in net inflows within the initial three years.
As the crypto landscape continues to evolve, Australia remains a key player in the digital asset space. The launch of the Monochrome Bitcoin ETF signifies a significant milestone in the country’s financial market, reflecting the growing interest and demand for cryptocurrency investment opportunities.