First Aussie Spot Bitcoin ETF Application Under New Rules

Monochrome, a Bitcoin-focused asset management company, and Vasco Trustees have lodged an application for Australia’s first fully licensed spot Bitcoin Exchange Traded Fund (ETF) as a first of its kind under the country’s new regulatory guidelines.

Monochrome announced today on 14 July 2023, its Responsible Entity partner, Vasco Trustees Ltd, lodged an updated application with the ASX to list the Monochrome #Bitcoin ETF, an exchange traded fund that will have direct exposure to bitcoin.

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— Monochrome (@MonochromeAsset) July 13, 2023

The Monochrome Bitcoin ETF (IBTC), intended to provide regulated Bitcoin exposure for retail investors, comes a year after Vasco received a license to manage crypto spot ETFs in the country.

The Australian Securities and Investments Commission (ASIC) revised its rules for the Australian financial services (AFS) license in late 2021. The amendment aimed to increase transparency among crypto firms and improve investor safeguards:

“Key matters covered by ASIC’s good-practice guide include admission and monitoring standards, custody of crypto-assets, pricing methodologies, disclosure and risk management.”

The updated regulation stipulates institutional support and backing of the underlying crypto are necessary for a spot ETF to be approved, with established service providers required to support these products.

To date, only two AFS licensees are currently authorized to hold a retail crypto-asset license, including the issuer of Monochrome’s ETF. Others are designated as wholesale, implying they have to gain approval to provide such products to retail investors.

Previous attempts at launching Bitcoin ETFs in Australia include one from Cosmos Asset Management. However, it was removed from the listing last year due to a lack of demand. Global X and 21Shares’ Bitcoin ETF, the first to list in Australia, is still trading today using a wholesale-retail feeder fund structure.

The distinct feature of Monochrome’s ETF falls under the “crypto-asset” licensing category, permitting the fund to hold Bitcoin directly, with the announcement stating:

“ASIC’s implementation of an Australian market framework for crypto-asset exchange-traded products is beneficial for product providers and investors by establishing a clear pathway and regulatory requirements for market participants offering financial products with direct exposure to crypto-assets.”

As Australia witnesses these developments, the U.S. market also sees a resurgence of interest in spot Bitcoin ETFs, with financial giants like BlackRock, Invesco, and WisdomTree recently filing applications.