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Australia Launches Its First Direct Bitcoin Spot ETF

Jun 3, 2024 at 02:22

Australia is set to introduce its very first spot Bitcoin exchange-traded fund (ETF) that will directly hold Bitcoin, aligning it with other nations like Hong Kong, Canada, and the U.S. that offer similar investment products.

Trading of the Monochrome Bitcoin ETF (IBTC) will commence on the Cboe Australia exchange starting Tuesday, June 4. This marks a significant development as Australia has previously only had access to exchange-traded products that offer Bitcoin exposure indirectly.

Monochrome Asset Management is pioneering this initiative under the new crypto asset category in Australian Financial Services (AFS) licensing, established in 2021. This license allows the ETF to directly own and hold Bitcoin, which will be securely stored offline in cold storage solutions that adhere to strict Australian institutional custody standards.

“Prior to IBTC, the avenues for Australian investors to gain exposure to Bitcoin through ETFs were limited to indirect holdings or international products, which do not come under the investor protection framework of the AFS licensing regime for crypto assets,” stated Monochrome.

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Unlike similar offerings in the U.S., where transactions are cash-based, this ETF will facilitate in-kind redemptions, allowing for direct and tangible trading and investment benefits.

Jeff Yew, CEO of Monochrome, expressed his anticipation of robust investor interest due to the recent uptick in indirect Bitcoin ETF investments. He also revealed plans for a forthcoming Ether ETF that would similarly hold the cryptocurrency directly, along with exploring additional digital asset opportunities to cater to investor demand.

This Australian launch follows closely on the heels of the introduction of four spot Bitcoin ETFs in Hong Kong on April 30. While three of these Hong Kong ETFs have seen net outflows since their inception, Bosera’s spot Bitcoin ETF has performed positively.

In contrast, the U.S. has seen significant activity with $13.9 billion in inflows into Bitcoin ETFs, which is countered by $17.9 billion in outflows from the Grayscale Bitcoin Trust.

Yew highlighted Australia’s strong inclination towards cryptocurrencies and projected that local spot Bitcoin ETFs could attract between $3 billion to $4 billion in net inflows within the initial three years of their launch.

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