Australia’s first spot Bitcoin ETF sets to start trading

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Monochrome Asset Management, an Australian-based firm, announced on June 2 that its Bitcoin exchange-traded fund (ETF), IBTC, will soon be available for trading. This launch marks the debut of the first Bitcoin ETF in Australia. The IBTC will start trading on the Cboe Australia exchange on Tuesday, June 4, with a management fee of 0.98%. To ensure maximum security, the ETF’s holdings will be stored offline on a device not connected to the internet.

As the first and only ETF in Australia to hold Bitcoin directly, Monochrome emphasized IBTC’s advantage over previous options available to Australian investors. Prior to IBTC, Australians could only invest in ETFs that indirectly held Bitcoin or through offshore Bitcoin products, which did not benefit from the investor protection rules under the directly held crypto asset Australian Financial Services Licensing (AFSL) licensing regime.

Monochrome’s Bitcoin ETF offers investors exposure to Bitcoin within a regulated framework, tracking the “CME CF Bitcoin Reference Rate Index” and linking its performance directly to the spot price of Bitcoin. The launch of IBTC on Cboe Australia makes it the first Australian exchange to list a Bitcoin ETF, outpacing the larger Australian Securities Exchange (ASX) in bringing such a product to market. This reflects a significant shift in the financial landscape, where more traditional financial institutions are beginning to recognize the value and demand for cryptocurrency investments.

This development taps into the growing demand for spot Bitcoin ETFs, which saw regulatory approval in the US market on January 11, 2024. The US approval led to a surge of investments from institutional and retail investors, and Australia is now positioned to offer similar secure and straightforward exposure to Bitcoin without requiring direct ownership. As a passive ETF, IBTC simplifies the process of investing in Bitcoin while providing returns tied to its price.

Monochrome’s application for a spot Bitcoin ETF on Cboe Australia met all regulatory requirements and secured approval from the Australian Securities and Investments Commission (ASIC). Following the US approval of spot Bitcoin ETFs in January 2024, other countries, including Hong Kong and Australia, have shown interest in these products. In April, Hong Kong approved spot-based Bitcoin and Ether ETFs, and the UK’s Financial Conduct Authority (FCA) approved WisdomTree’s cryptocurrency exchange-traded products for listing on the London Stock Exchange. These approvals signal a broader acceptance and integration of cryptocurrencies into mainstream financial markets, highlighting the increasing interest and confidence in digital assets.

The introduction of Australia’s spot Bitcoin ETF signifies a broader acceptance of Bitcoin as an institutional asset class, with other countries likely to follow. This regulated structure provides legitimacy and offers investors a direct way to gain exposure to Bitcoin. The ease of access and the security provided by a regulated ETF can attract a wider range of investors, including those who may have been hesitant to invest directly in cryptocurrencies due to security concerns or the complexity of managing digital wallets.

Furthermore, the presence of a spot Bitcoin ETF in Australia can have a ripple effect on the broader market. It can encourage other financial institutions and asset managers to explore and possibly launch their own cryptocurrency-related products, thereby increasing the availability and variety of investment options for the general public. This growing ecosystem can contribute to the overall stability and maturity of the cryptocurrency market.

The launch of Monochrome’s IBTC on Cboe Australia marks a significant milestone in the evolution of cryptocurrency investments in Australia. It represents a key step towards integrating digital assets into the traditional financial system, providing a safe and regulated avenue for investors to gain exposure to Bitcoin. As more countries and financial institutions follow suit, the global acceptance and adoption of cryptocurrencies as a legitimate asset class are likely to continue growing, paving the way for a more inclusive and diversified financial future.