Australia Debuts First Spot ETF Directly Holding Bitcoin

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Key takeaways:

  • When markets open on Tuesday, Australia’s first spot Bitcoin exchange-traded fund (ETF), which owns the asset directly, is scheduled to begin trading.
  • In contrast to its US counterparts, which are cash-created, investors can redeem the ETF in kind.

When markets open on Tuesday, Australia’s first spot Bitcoin exchange-traded fund (ETF), which owns the asset directly, is scheduled to begin trading.

On Tuesday, June 4, the Monochrome Bitcoin ETF (IBTC) will go live at market open on the Cboe Australia exchange.

Several exchange-traded products that expose investors to Bitcoin are currently available in Australia, but Monochrome Asset Management is the first to receive clearance under a new category of crypto asset licensing established by Australian Financial Services (AFS) licensing guidelines in 2021.

It permits the ETF to directly hold Bitcoin. According to Monochrome, IBTC assets are kept offline using a crypto custody solution that complies with “Australian institutional custody regulatory standards” on a device that isn’t linked to the internet. Monochrome made a statement stating:

“Before IBTC, Australian investors were only able to invest in ETFs that indirectly hold Bitcoin or through offshore Bitcoin products, both of which don’t benefit from the investor protection rules under the directly held crypto asset AFS licensing regime,”

Based on the steady rise of indirect Bitcoin ETF products in the past few months, Monochrome CEO Jeff Yew expects “strong interest” in his company’s ETF. He added that Monochrome is “ready” to develop and introduce an Ether ETF ETF that will hold the asset directly. 

Yew stated that Australia is a “very crypto-heavy country” and predicted that net inflows from local spot Bitcoin ETFs would range from $3 billion to $4 billion over the course of the first three years.

In contrast to its US counterparts, which are cash-created, investors can redeem the ETF in kind. Just over a month has passed since the April 30 introduction of four spot Bitcoin ETFs in Hong Kong, when IBTC made its Australian debut. Except for Bosera’s spot Bitcoin ETF, three of the four Hong Kong ETFs have had cumulative net outflows since their inception.

With a cumulative inflow of $13.9 billion, US Bitcoin ETFs have performed better than the Grayscale Bitcoin Trust, which has seen outflows of $17.9 billion.

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