Aussie asset manager to offer crypto ETFs using unique license variation

Australian asset manager Monochrome Asset Management has been granted the country’s first Australian Financial Services License (AFSL) for a spot crypto exchange-traded fund (ETF).

Jeff Yew, CEO of Monochrome Asset Management, speaking to Cointelegraph, said the AFSL approval is significant, as 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 are specifically authorized by the Australian Securities & Investments Commission (ASIC) to do so.

The Monochrome boss said the approval represents a significant step forward for both the advisory industry and retail investors:

“We see choice as a good thing for investors, especially when trading in the regulated space, as not all offers are the same.”

“Investors investing in Monochrome’s ETFs will know that their funds invest directly in Bitcoin (BTC) and Ethereum (ETH), and importantly within the regulatory tracks established by ASIC specifically for crypto assets,” he said.

At this stage, there is no fixed date when the Monochrome Bitcoin ETF (IBTC) will be made available, but it is expected in September 2022, once the PDS and TMD are 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 cryptoassets currently identified by ASIC as suitable for retail ETF exposure.”

“Over time, and as the market matures, we will take an open approach to making new products available.”

A first for a crypto ETF

Operating under an Australian Financial Services License (AFSL) with a direct authorization for cryptoassets ensures that the fund and issuer are subject to robust oversight by ASIC, Yew said.

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

Approval of the Australian Financial Services License variation means that ASIC has assessed and confirmed that the licensee has relevant crypto asset experience to operate ETFs that directly hold Bitcoin and Ethereum.

This gives investors greater protection built around ASIC’s Report 705, such as appropriate benchmarking against the spot price and Australian-compliant custody solutions.

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

The road to approval

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

Related: Digital asset manager Monokrom valued at $15 million after Series A

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

Typically, the process for a financial services license variation usually takes six to twelve months, which was the timeline in this case.