Australia is set to launch its first spot Bitcoin ETF that directly holds the cryptocurrency, marking a significant milestone in the country’s financial market. The Monochrome Bitcoin ETF (IBTC) will commence trading on the Cboe Australia exchange on Tuesday, June 4.
Direct Bitcoin Holding: A New Milestone in Australia
Although Australia already offers several exchange-traded products providing exposure to Bitcoin, Monochrome Asset Management’s new ETF is the first to receive approval under the 2021 crypto asset licensing category. The licensing rules established by Australian Financial Services (AFS) will enable the ETF to hold Bitcoin directly.
Notably, IBTC’s Bitcoin will not be stored online. According to the statement from Monochrome, IBTC’s Bitcoin holdings will be stored offline. This is done using a device not connected to the internet and a crypto custody solution that complies with “Australian institutional custody regulatory standards.”
Prior to IBTC’s unveiling, investors in Australia could only invest in ETFs that held Bitcoin indirectly or through offshore products. Under that arrangement, investors did not benefit from the protection rules under the directly held crypto asset AFS licensing regime.
Additionally, unlike its U.S. counterparts, which are cash-settled, this ETF allows for in-kind redemption from investors.
First Spot Bitcoin ETF Anticipated Market Impact
Jeff Yew, CEO of Monochrome, expressed confidence in the anticipated “strong interest” for the ETF, attributing it to the steady growth of indirect Bitcoin ETF products in recent months.
“We are exploring additional thematic opportunities within the digital asset sector to meet investor demand,” Yew added.
Yew also hints at Monochrome’s preparedness to launch an Ether (ETH) ETF, which will similarly hold the asset directly. According to Yew, Australia has a strong interest in cryptocurrencies, and local spot Bitcoin ETFs could generate between $3 billion to $4 billion in net inflows within the first three years.
Comparatively, the U.S. Bitcoin ETFs have seen a cumulative inflow of $13.9 billion in a few months, countered by $17.9 billion in outflows from the Grayscale Bitcoin Trust. The introduction of IBTC in Australia follows the launch of four spot Bitcoin ETFs in Hong Kong on April 30.
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