Monochrome Asset Management has filed an application to list an Ethereum exchange-traded fund (ETF) on Cboe Australia under the symbol IETH, as announced on September 5.
The ETF aims to provide retail investors with a regulated way to access Ethereum. It will also be a dual-access fund, allowing investors to request redemptions in cash or in-kind.
The cabinet expects a decision on the request by the end of the month.
If approved, IETH will expand regulated cryptocurrency investment options for Australian investors. Notably, this follows the previous launch of Monochrome’s Bitcoin ETF (IBTC), which became the first Australian ETF to directly hold Bitcoin.
According to the company’s website, IBTC’s Bitcoin holdings were valued at $11.3 million as of September 4.
Ethereum ETFs Face Challenges
Monochrome’s plan to create an Ethereum ETF comes amid difficulties faced by similar products in the United States.
U.S.-traded spot Ethereum ETFs saw negative net flows of $476 million in their first months of trading, primarily due to outflows triggered by Grayscale’s ETHE.
Market watchers attributed this underperformance to Bitcoin’s first-mover advantage, the lack of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market, making these products less attractive to institutional investors.
Quinn Thompson, founder of crypto hedge fund Lekker Capital, highlighted the stark contrast between early Bitcoin and Ethereum flows. He noted that while Grayscale outflows have slowed, there is no significant interest or inflows into other Ethereum ETFs to offset the outflows.
Additionally, ETHE’s surplus was lower than GBTC’s, partly due to forced selling by bankrupt entities.
Thompson noted that this made Ethereum ETFs even less successful, given the headwinds Bitcoin was facing. He added:
“There is simply no demand from smart money/traditional investors/whatever you want to call it for ETH at its current valuation.”
Eric Balchunas, senior ETF analyst at Bloomberg, however, believes the outflows won’t last forever. He expects inflows into newly launched ETFs to eventually offset current outflows.
