Australia is gearing up to introduce its first-ever spot Bitcoin exchange-traded fund (ETF) that directly holds the asset, with trading set to commence on Tuesday when markets open. The Monochrome Bitcoin ETF (IBTC) will debut on the Cboe Australia exchange on June 4.
While Australia already offers various exchange-traded products providing exposure to Bitcoin, Monochrome Asset Management has secured approval under a new crypto asset licensing category established within the Australian Financial Services (AFS) licensing regulations in 2021. This unique license enables the ETF to hold Bitcoin (BTC) directly. Monochrome has emphasized that IBTC’s holdings are securely stored offline in a device disconnected from the internet, complying with Australian institutional custody regulatory standards.
Prior to the launch of IBTC, Australian investors solely had access to ETFs indirectly holding Bitcoin or offshore Bitcoin products, which lacked the safeguards of the investor protection regulations under the directly held crypto asset AFS licensing framework, as per Monochrome’s statement.
Diverging from the cash creation model of its U.S. counterparts, the ETF allows investors to redeem in-kind. Monochrome CEO Jeff Yew anticipates substantial interest in the firm’s ETF, considering the consistent growth of indirect Bitcoin ETF products in recent times. He also confirmed plans to develop and launch an Ether (ETH) ETF that would similarly hold the asset directly, emphasizing the exploration of other thematic opportunities within the digital asset sector to cater to investor demands.
The debut of IBTC in Australia closely follows the introduction of four spot Bitcoin ETFs in Hong Kong on April 30, with three of the four experiencing cumulative net outflows post-launch, except for Bosera’s spot Bitcoin ETF. In contrast, U.S. Bitcoin ETFs have demonstrated a more positive performance, recording a cumulative inflow of $13.9 billion, despite $17.9 billion in outflows from the Grayscale Bitcoin Trust.
Yew highlighted Australia’s strong inclination towards cryptocurrencies, projecting that local spot Bitcoin ETFs could attract net inflows ranging from $3 billion to $4 billion within the initial three years.
In the midst of this crypto evolution, Sydney stands out as a vibrant hub for digital assets, offering more than just a mere ‘token’ bridge for enthusiasts.