Monochrome Asset Management has filed to list an Ethereum exchange-traded fund (ETF) on Cboe Australia under the ticker IETH, as announced on Sept. 5.
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 cash or in-kind redemptions.
The firm expects a decision on the application by the end of the month.
If approved, IETH will expand regulated crypto investment options for Australian investors. Notably, it follows the earlier launch of Monochrome’s Bitcoin ETF (IBTC), which became Australia’s first ETF holding Bitcoin directly.
According to the company’s website, IBTC’s Bitcoin holdings were valued at $11.3 million as of Sept. 4.
Ethereum ETFs face challenges
Monochrome’s plan for an Ethereum ETF comes amid difficulties for similar products in the United States.
The US-traded spot Ethereum ETFs saw negative net flows of $476 million during their initial trading months, mainly due to outflows triggered by Grayscale’s ETHE.
Market observers attributed this underperformance to Bitcoin’s first-mover advantage, the lack of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market, which makes these products less attractive to institutional investors.
Quinn Thompson, founder of crypto hedge fund Lekker Capital, highlighted the stark contrast in 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 counterbalance the outflows.
Additionally, the ETHE overhang was smaller than that of GBTC, partly due to forced selling by bankrupt entities.
Thompson noted that this made Ethereum ETFs perform even worse, considering the headwinds Bitcoin faced. He added:
“There is simply no smart money/traditional investor/whatever you want to call it demand for ETH at its current valuation.”
However, Bloomberg Senior ETF analyst Eric Balchunas believes the outflows will not last indefinitely. He expects that inflows into the newly launched ETFs will eventually offset the current outflows.
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