Australia: tomorrow the first crypto spot ETF arrives

Tomorrow, Tuesday, June 4, 2024, the first crypto spot ETF in Australia will debut on the stock exchange. 

It is the Monochrome Bitcoin ETF (IBTC) by Monochrome, and it will be in all respects a spot Bitcoin ETF. 

It will be tradable on the local exchange Cboe Australia.

IBTC: the first crypto spot ETF in Australia

IBTC is in all respects the first crypto spot ETF to be launched on an Australian exchange.

It is a fund entirely invested in BTC that allows taking a position directly on the price of Bitcoin on Cboe Australia.

In reality, the fund has already existed since March of last year, but only tomorrow will it debut on the stock exchange. 

A year ago the price of IBTC was only 3 Australian dollars (AUD), while now it has risen to over 10$. This performance obviously follows that of the price of Bitcoin, which in the same period went from 36,000 AUD to almost 103,000.

It should be remembered that one Australian dollar today is worth about 0.67$, so its current quotation of 10.3 AUD actually corresponds to about 6.8 American dollars. 

Currently, it appears to have already issued more than 170,000 shares, with a total NAV exceeding 1.7 million Australian dollars. 

Monochrome is an Asset Management company specialized in offering regulated derivative products on crypto assets. For now, however, it has only released a single product on the market, IBTC to be precise. 

Australia: the Cboe Exchange welcomes the first crypto ETF

The main traditional stock exchange in Australia is the Australian Securities Exchange (XASX) in Sydney. 

It is one of the top 25 stock exchanges in the world, but it has a total market cap of only about 2.6 trillion dollars, which is just slightly less than that of the single Nvidia stock. 

Cboe Australia, on the other hand, is a subsidiary of the better-known Cboe in the United States that operates specifically in Australia. 

This stock exchange specializes in ETFs rather than stocks, and in fact, it claims to have a market share of even 30% of the entire Australian ETF market. 

Previously it was known as Chi-X, and it was launched in October 2011, which is less than 13 years ago. In June 2021, it was acquired by Cboe Global Markets and renamed. 

In light of this, it is very difficult to imagine that tomorrow’s listing could have significant effects on the price of Bitcoin.

The other ETFs

In reality, on the Australian stock exchanges, there were already some crypto ETFs. 

However, it was not about spot ETFs, but funds that held BTC only indirectly, for example through offshore products. The problem is that in this way they did not benefit from the investor protection rules provided by the Australian Financial Services Licensing (AFSL) licensing regime. 

Instead, IBTC will provide the first ETF available on Australian exchanges to hold the entire underlying directly in BTC. 

Obviously, by directly holding BTC, the risks related to custody increase, but nowadays there are very reliable institutional-level custody services. 

In fact, Monochrome has chosen Gemini Trust Company as the custodian of the fund’s BTC, the American company specialized in the custody of crypto assets linked to the Gemini exchange. 

Only thanks to this institutional-level custodian was it able to offer the Australian stock exchange a spot Bitcoin ETF. 

It should be noted that even in the USA until last year there were only ETFs on BTC derivative products, such as futures, and until the arrival on the stock exchange of spot Bitcoin ETFs, these derivative products had not been very successful.

Instead, in Canada, where there was already one (BTCC.TO), this had achieved greater success, precisely because it was directly and entirely collateralized in BTC.

In fact, as of today, BTCC.TO remains by far the largest Bitcoin ETF in the world after the big 5 Americans. 

The rest of the world

In Europe, for years now, there have been spot crypto ETFs or similar, especially on the Swiss exchanges. 

In the USA, those on Bitcoin landed on the stock exchange this year, and in the coming weeks, those on Ethereum should also arrive.

Even on Chinese stock exchanges, there are already ETFs on BTC and ETH spot, but only on the international one in Hong Kong, and not on the Shanghai one aimed at the domestic market. 

The most important market remains absolutely the US one, followed in this case by the Canadian one of the Toronto Stock Exchange. 

There are then the European markets, such as the German one and the English one, but especially the Swiss one. Also in Brazil and Sweden, there are similar products, while in other markets, such as the Japanese one, there do not appear to be any spot Bitcoin ETFs. 

In other words, the main markets are only two: the North American one and the European one. For now, in the rest of the world, these products are either totally absent from traditional exchanges, or present in an extremely limited measure.