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Battle of the bitcoin ETFs: Who ‘directly’ held the asset first?

By Jessica Penny
5 minute read

Global X ETFs’ chief executive has said that “effectively nothing” differentiates IBTC and EBTC from an end-investor perspective.

Monochrome Asset Management earlier this month announced the official launch of the Monochrome Bitcoin ETF (IBTC) on the Cboe Australia exchange, operating under the ticket “IBTC”.

Jeff Yew, the CEO of Monochrome, has asserted that this is Australia’s first exchange-traded fund (ETF) to hold bitcoin directly, highlighting that never before has a local ETF held the asset at the “fund level”.

But more than two years ago, in April 2022, the Global X 21Shares Bitcoin ETF (EBTC) similarly dubbed itself as the first Australian ETF to invest directly in bitcoin.


Global X ETFs chief executive Evan Metcalf explained that, despite the structural differences between how each fund provides exposure to bitcoin, “effectively nothing” differentiates the two funds – at least for investors.

“From an end-investor point of view, there’s actually really no difference,” Metcalf told InvestorDaily.

“There are multiple ways to achieve the same investment objective, and when comparing products, potential investors should be more concerned with the quality, scale, and experience of the product issuer and their key service providers.”

What are the differences?

Global X identified key structural differences between IBTC and EBTC. Namely, Metcalf explained that while EBTC utilises a two-tier absolute entitlement trust that conveys an absolute entitlement to a specific amount of bitcoin to the unitholder, IBTC uses a single-tier structure.

“We hold the bitcoin in the name of the trustee, the same trustee that issues the ETF units, so we have institutional grade custody with Coinbase. So we are 100 per cent holding the underlying bitcoin on behalf of investors, and investors in our structure have an absolute entitlement to that bitcoin,” Metcalf clarified.

“It doesn’t actually change anything from a day-to-day operations perspective, and it doesn’t add any additional costs or anything to maintaining the fund or anything like that.”

Turning to the similarities, the ETF provider added that both funds have authorised participant creation/redemptions (in-kind and cash) and physical redemption available to shareholders.

Conversely, Monochrome maintains that the introduction of IBTC marks a “significant milestone” for Australian financial markets and its investor community.

“Prior to IBTC, Australian investors were only able to invest in ETFs that indirectly hold bitcoin or through offshore bitcoin products, both which do not benefit from the investor protection rules under the directly held crypto asset AFS licensing regime,” the firm said at the time of IBTC’s launch.

From a regulatory perspective, Yew also highlighted that Monochrome is the sole compliant fund under recent Australian regulations mandating issuers of crypto asset exchange-traded products must obtain a specific “crypto assets” licence for substantial crypto assets holdings.

Namely, back in 2021, corporate regulator Australian Securities and Investments Commission (ASIC) announced that responsible entities that intend to hold underlying assets that comprise crypto assets will need to hold an authorisation in relation to crypto assets.

“There are no other bitcoin ETPs currently quoted in Australia that are authorised under this rule.

“[EBTC] adopts a wholesale-retail feeder fund structure, where a retail fund (the ETF) invests in a wholesale fund that holds the digital asset, as a wholesale fund is excluded from the new digital asset provisions specific to retail funds,” Yew recently told InvestorDaily.

According to the Monochrome CEO, a “direct” holding of this nature provides investors with a “straightforward, transparent pathway to exposure”.

Addressing these claims and clarifying why Global X has yet to obtain such an authorisation, Metcalf explained that this regulatory process was less accessible in April 2022 when EBTC first came to market.

However, he has said EBTC has still been through “the same rigour that any other structure has”.

“The crypto asset authorisation is something that was introduced in late 2021, but the framework around that and the market rules around that, were not developed by the exchanges until quite a bit later than that.

“So at the time we came to market, it wasn’t really an option to have that crypto asset license, even though it theoretically existed. And so we’ve looked at other alternatives.”

Metcalf further assured that both ASIC and Cboe were “very happy” with the structure that the firm proposed, nonetheless. While noting that receiving the crypto-asset licence is still not out of the question, he clarified that the firm doesn’t see “that it actually adds any real value to end investors”.