Monochrome Asset Management has announced the official launch of the Monochrome Bitcoin ETF (IBTC) on Cboe.
In April, Monochrome, which initially submitted its application to the ASX in July 2023 with plans for a second quarter 2024 launch, announced it had decided to shift its focus to Cboe.
In a statement issued on its website at the time, the asset manager stated Cboe “aligns more closely with our strategic vision, market reach, and time frame”.
Jeff Yew, the CEO of Monochrome, has asserted that this is Australia’s first exchange-traded fund to hold bitcoin directly. Previously, Global X claimed the “first to market” title for its Global X 21Shares Bitcoin ETF (Cboe: EBTC), insisting it is Australia’s only spot bitcoin ETF.
The EBTC tracks the performance of bitcoin in Australian dollars and grants investors access to segregated bitcoin held in secure “cold storage” with Coinbase, the world’s largest cryptocurrency custodian.
However, according to Yew, the EBTC does not hold bitcoin directly, hence making Monochrome’s bitcoin ETF offering unique.
“We are excited to bring the Monochrome Bitcoin ETF (IBTC) to market. IBTC holds bitcoin directly – a first in Australia. This aligns with Monochrome’s investor protection-driven mission to offer secure, compliant, and straightforward pathways to participate in this transformative space,” Yew said.
Also, setting the IBTC apart is Monochrome’s authorisation under a crypto-asset licensing category within the Australian financial services licensing (AFSL) regime, as highlighted by the firm.
This licensing category was introduced on 29 October 2021 to ensure responsible entities who hold substantial portions of crypto assets in a retail fund adhere to specific investor protection rules surrounding crypto assets.
“IBTC is the first and only exchange traded fund in the market to be authorised under the crypto asset licensing category. 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,” the firm said.
The Monochrome Bitcoin ETF (IBTC) utilises the CF Benchmarks Ltd CME CF Bitcoin Reference Rate – Asia Pacific Variant as its bitcoin price benchmark.
This, according to the firm, ensures investors benefit from a transparent and robust pricing mechanism that is resistant to market manipulation. IBTC’s price benchmark adheres to the International Organisation of Securities Commissions (IOSCO) benchmarking standards.
Delving further into the working of the IBTC, Monochrome said its bitcoin holdings are stored completely offline in a secure device that is not connected to the internet, under a regulated crypto asset custody solution that meets Australian institutional custody regulatory standards.
Listing on ASX still a race
Fund managers have been vying to become the first to list their spot bitcoin ETF offering on the ASX for some time, which has proven to be more complex than many appear to have expected.
While Monochrome appears to have dropped out of the race, still looking to become the first are VanEck and DigitalX after the latter joined the race in April.
A couple of months ago, VanEck cited “a number of hurdles from a regulatory and exchange framework perspective”, noting that several aspects need to be addressed, including approval from ASIC before a bitcoin ETF can be listed on the ASX.
DigitalX may now encounter these challenges while also contending with VanEck’s presence.
Namely, deputy head of investment and capital markets, Jamie Hannah, told InvestorDaily in April that VanEck is still on track to be the first Australian spot bitcoin ETF on the ASX.
“VanEck is working closely with the ASX to bring the first bitcoin ETF to the exchange,” Hannah said.
“While the requirements are significant, we are on track to meet them and believe we are the best placed fund manager in Australia with the prerequisite global expertise and heritage managing cryptocurrencies.”
Ultimately, with the competition heating up, DigitalX needs to move quickly if it wants to secure the top spot.
On its website, DigitalX says it’s “the only ASX-listed company that holds bitcoin as a core treasury asset and is an investor in both of the DigitalX funds”.
The firm recently announced its bitcoin fund and digital asset fund increased 70.2 per cent and 56.9 per cent, respectively, over the quarter.
