Australia gets first spot ETF that holds Bitcoin directly

Australia is set to join Hong Kong, Canada and the U.S. in offering investors an ETF that invests in and directly holds Bitcoin.

Australia’s first spot Bitcoin exchange-traded fund (ETF) — which holds the asset directly — is set to launch for trading when markets open on Tuesday.

The Monochrome Bitcoin ETF (IBTC) will begin trading at markets open on the Cboe Australia exchange on Tuesday, June 4.

Australia already has several exchange-traded products offering exposure to Bitcoin, but Monochrome Asset Management is the first to get approval under a new crypto asset licensing category made under Australian Financial Services (AFS) licensing rules in 2021.

Monochrome was proud to host 120 guests in Sydney last week as we celebrate the upcoming launch of the Monochrome Bitcoin ETF.

This milestone marks a significant step in our journey empower investors with the tools and confidence to navigate the digital financial landscape. pic.twitter.com/tfWGzYwl3R

— Monochrome (@MonochromeAsset) June 2, 2024

It allows the ETF to hold Bitcoin (BTC) directly. Monochrome said IBTC’s holdings are stored offline in a device not connected to the internet and with a crypto custody solution that meets “Australian institutional custody regulatory standards.”

“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,” Monochrome said in a statement.

Unlike its counterparts in the United States, which are cash create, the ETF allows in-kind redemption from investors.

Monochrome CEO Jeff Yew told Cointelegraph he anticipates “strong interest” in his firm’s ETF given the consistent growth of indirect Bitcoin ETF products in recent months.

He confirmed the firm is “ready” to build and launch an Ether (ETH) ETF, which will also hold the asset directly.

“We are also exploring other thematic opportunities within the digital asset sector to meet investor demand,” he added.

Related: Why is Bitcoin stagnated despite $2B in spot ETF inflows?

The launch of IBTC in Australia comes just a little over a month after the launch of four spot Bitcoin ETFs in Hong Kong on April 30.

However, three out of four of the Hong Kong ETFs have had cumulative net outflows since launching, with the exception of Bosera’s spot Bitcoin ETF.

U.S. Bitcoin ETFs have fared better, with a cumulative inflow of $13.9 billion, offset by $17.9 billion in outflows from the Grayscale Bitcoin Trust.

Yew claimed Australia was a “very crypto-heavy country” and expects local spot Bitcoin ETFs to generate between $3 billion to $4 billion in net inflows within the first three years.