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Monochrome Asset Management has submitted an application to list an ethereum exchange-traded fund (ETF) on Cboe Australia under the symbol IETH, as ethereum-etf-lodged-under-ticker-ieth”>announced September 5th.
The ETF aims to offer retail investors a regulated way to gain exposure to ethereum. It will also be a dual-access fund, allowing investors to request redemptions in cash or in kind.
The firm expects a decision on the application by the end of the month.
If approved, IETH will expand regulated cryptocurrency investment options for Australian investors. Notably, this follows the earlier launch of the Monochrome bitcoin ETF (IBTC), which became Australia’s first ETF to hold bitcoin directly.
According to the company bitcoin-etf#performance”>websiteIBTC's bitcoin holdings were valued at $11.3 million as of September 4.
ethereum ETFs face challenges
Monochrome's plan for an ethereum ETF comes amid difficulties for similar products in the United States.
US-listed ethereum spot ETFs experienced negative net flows of $476 million during their initial months of trading, primarily due to outflows triggered by Grayscale’s ETHE.
Market observers attributed this poor performance to the first-mover advantage in the bitcoin market, the lack of participation options in ethereum ETFs, and lower liquidity in the ethereum market, making these products less attractive to institutional investors.
Quinn Thompson, founder of cryptocurrency 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 counter the outflows.
Additionally, ETHE's surplus was smaller than GBTC's, partly due to forced selling by bankrupt entities.
Thompson noted that this caused ethereum ETFs to perform even worse, considering the headwinds bitcoin was facing. x.com/qthomp/status/1830544309591916580″>aggregate
“There is simply no smart money/traditional investor/whatever you want to call it demand for eth at its current valuation.”
However, Eric Balchunas, senior ETF analyst at Bloomberg, believes the outflows will not last indefinitely and expects capital inflows into newly launched ETFs to offset current outflows.
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