Monochrome Asset Management has filed to list an Ethereum exchange-traded fund (ETF) on Cboe Australia under the ticker IETH, as reported on Sept. 5.

The ETF intends to provide retail investors with a regulated avenue to gain exposure to Ethereum. It will also be a dual-access fund, allowing investors to request cash or in-kind redemptions.

The firm anticipates a decision on the application by the end of the month.

If approved, IETH will broaden regulated cryptocurrency investment options for Australian investors. Importantly, this comes after the earlier launch of Monochrome's Bitcoin ETF (IBTC), which became Australia's first ETF to directly hold Bitcoin.

According to the company's website , IBTC's Bitcoin holdings were valued at $11.3 million as of Sept. 4.

Ethereum ETFs face challenges

Monochrome’s proposal for an Ethereum ETF comes amid challenges for similar products in the United States.

US-traded spot Ethereum ETFs experienced negative net flows of $476 million during their initial trading months, primarily due to outflows driven by Grayscale’s ETHE.

Market observers attributed this underperformance to Bitcoin’s first-mover advantage, the lack of staking options in Ethereum ETFs, and lower liquidity in the Ethereum market, which makes these products less appealing to institutional investors.

Quinn Thompson, founder of crypto hedge fund Lekker Capital, pointed out the significant difference in early Bitcoin and Ethereum flows. He observed that while Grayscale outflows have slowed down, there is no substantial interest or inflows into other Ethereum ETFs to counteract the outflows.

Moreover, the ETHE overhang was smaller than that of GBTC, partly due to forced selling by bankrupt entities.

Thompson remarked that this made Ethereum ETFs perform even worse, given the challenges Bitcoin was facing. He added :

“There is simply no institutional investor demand for ETH at its current valuation.”

However, Bloomberg Senior ETF analyst Eric Balchunas believes that the outflows are not a permanent situation. He predicts that the inflows into the newly introduced ETFs will eventually balance out the current outflows.