Aussie asset manager to offer crypto ETF using unique license variation

Australian asset manager Monochrome Asset Management has landed the country’s first Australian financial services license (AFSL) for a spot crypto exchange-traded fund (ETF). 

Speaking to Cointelegraph, Jeff Yew, CEO of Monochrome Asset Management said the AFSL approval is significant, as until this point, approved crypto ETFs in Australia only operate under general financial asset authorization, and only indirectly hold crypto-assets.

Yew noted that Monochrome’s crypto ETFs on the other hand, will directly hold the underlying crypto-assets and is specifically authorized by the Australian Securities & Investments Commission (ASIC) to do so.

The Monochrome executive said the approval represents a significant step forward for both the advice industry and retail investors.

"We see choice being a good thing for investors, particularly when dealing in the regulated space, as not all offerings are equal."

"Investors investing in Monochrome's ETFs will know that their funds are investing directly in Bitcoin (BTC) and Ethereum (ETH), and importantly within the regulatory rails established by ASIC specifically for crypto-assets,” he said.

At this stage, there is no firm date when the Monochrome Bitcoin ETF (IBTC) will be made available, but it's expected in September 2022, once the PDS and TMD have been issued, and subject to regulatory approvals.

When the ETFs are made available, Yew says "Monochrome will focus on BTC and ETH because they are the only two crypto-assets currently identified by ASIC as being suitable for retail ETF exposure."

"Over time, and as the market matures, we will take an open-minded approach to make new products available."

A first for a crypto ETF

Operating under an Australian Financial Services Licence (AFSL) with a direct crypto-asset authorization ensures that the fund and the issuer are subject to robust oversight from ASIC, said Yew. 

AFSL authorization opens new regulated investment opportunities for direct retail investors and through licensed financial advisers.

Approval of the Australian Financial Services Licence variation means that ASIC has considered and confirmed that the licensee has the relevant experience in crypto-assets to operate ETFs that directly hold Bitcoin and Ethereum.

This gives investors greater protections built around ASIC's Report 705 such as suitable benchmarking against the spot price and Australian-compliant custody solutions.

Cointelegraph previously reported a warning from Australia’s financial regulator about using unregistered cryptocurrency businesses.

Road to approval

Monochrome Asset Management was launched in early 2021 by former Binance Australia CEO Jeff Yew to push for institutional adoption of crypto assets in Australia.

Related: Digital asset manager Monochrome valued at $15M following Series A

Their ETF plan has been in the works since February 2022.

Generally, the process for a financial services licence variation typically takes six to twelve months, which was the timeline in this case.