Monochrome Bitcoin ETF (IBTC) - FAQs

What are ‘Bitcoin Interests’ in IBTC?

Bitcoin Interests in IBTC represent a beneficial interest in a specific amount of Bitcoin held in a separate trust by the Responsible Entity. Each Bitcoin Interest allows investors to gain exposure to Bitcoin's price movements without directly holding bitcoin themselves. The Bitcoin Allocation for each Bitcoin Interest is calculated and published daily.

What is Bitcoin?

Bitcoin is the asset native to the Bitcoin Network, the issuance of which is governed by the Bitcoin Network’s monetary policy and will not exceed a total supply of 21 million bitcoin.

Bitcoin is an open source software project that first introduced the concept of using a shared digital ledger, distributed among a large, voluntary, distributed network of computers (or 'nodes'), requiring real-world energy to be spent by miners to process and verify transactions, to create provable digital scarcity and ownership of data.

More information about Bitcoin, the foundations of the asset, associated risks and its impacts on ESG can be viewed at https://www.monochrome.au/research.

What is the difference between investing via the ETF or the Fund?

Investing in the ETF Buy IBTC on Cboe Australia using the ticker ‘IBTC’.

• Easy Trading: Trade like regular stocks.
• High Liquidity: Buy or sell anytime the market is open.

Investing in the Fund Buy IBTC directly from the fund’s registry, not through a crypto-asset exchange.

• Direct Purchase: Deal directly with the fund, bypassing exchanges.
• Ideal for Large Investors: Suitable for investors like institutional investors or SMSFs.
• Custom Terms: May offer different conditions tailored to specific needs.

Both options give you the same exposure to Bitcoin. Investing via the ETF provides easy and quick trading, or investing via the Fund provides direct and customised purchases.

How do I know if I am eligible to apply?

IBTC is open to all investors over 18 years of age that receive the PDS (electronically or otherwise) in Australia. Before applying, investors should read the Product Disclosure Statement and satisfy the criteria of the Target Market Determination. For more information, visit the IBTC product page.

How do I apply to invest in IBTC?

1. Brokerage Account: Ensure you have an account with a stockbroker or trading platform that provides access to Cboe Australia.

2. Search for IBTC: Log into your brokerage account and search for the ticker symbol "IBTC" on Cboe Australia.

3. Place an Order: Decide the amount you want to invest and place a buy order for IBTC units through your brokerage platform. Follow the instructions provided by your broker for placing the order.

4. Confirm and Monitor: Confirm your order details and submit the order. Once your order is executed, monitor your investment through your brokerage account.

5. Direct Purchase (Unlisted Avenue): If you prefer to invest directly through the fund’s registry, contact Monochrome or the fund’s registry for instructions on how to apply directly.

6. Consult the PDS and TMD: Before investing, ensure you have read and understood the Product Disclosure Statement (PDS) and the Target Market Determination (TMD) to assess if the investment aligns with your financial goals and risk tolerance.

For detailed information and guidance, refer to the PDS available on the Monochrome website or contact your financial advisor.

How can I contact the Unit Registry about my application?

You can contact the Unit Registry’s customer service line by phone on 1300 288 664 or by email at hello@automic.com.au.

If you have any questions or require assistance with your application, you should contact the Unit Registry as soon as possible. The Unit Registry will be able to provide you with information about the application process, including any documentation that is required, and can assist you with any issues that may arise.

It is important to keep all documentation related to your investment in IBTC in a safe place for future reference.

Can self-managed superannuation funds (SMSFs) invest in IBTC?

Yes. IBTC accepts investments from an SMSF.

Before investing, the trustee of an SMSF should ensure the investment is within the scope of their SMSF’s investment strategy and seek professional advice as needed. Once that’s done, trustees of SMSFs should read and understand the fund’s Product Disclosure Statement (PDS) and Target Market Determination (TMD), and follow the simple online application process, all of which are available at https://apply.automic.com.au/ibtc.

It is important to note that investing in IBTC involves risks, including the risk of loss of capital. You should carefully consider your investment objectives and seek professional advice before making any investment decisions.

What is the difference between investing in IBTC and buying bitcoin on a digital currency exchange?

There are two key points of differentiation between investing in IBTC and buying bitcoin on a digital currency exchange (DCE).

Custody IBTC: When investors purchase Bitcoin Interests in the IBTC, the underlying bitcoin is securely custodied with a regulated and qualified custodian, Gemini Trust Company, LLC. The contract governing the custody arrangement meets the strict requirements applied by the Australian Securities and Investments Commission in relation to the custody of assets for retail investors.

DCE: Conversely, with bitcoin purchased through a DCE, unless investors move their assets into self-storage, the keys to their bitcoin are held by the DCE itself. This creates significant risks, as DCEs have the ability to limit or block customer withdrawals, and are able to use customer funds for their own purposes.

Regulation IBTC: A fully regulated and registered managed investment scheme offered under an Australian financial services licence with a specific crypto-asset authorisation.

DCE: DCEs operate largely outside the regulated perimeter overseen by the Australian Securities and Investments Commission (ASIC).

Investors that want exposure to bitcoin but do not want to deal with the technical aspects of buying and storing bitcoins themselves may consider IBTC more suited than purchasing bitcoin on a DCE. Fees generally apply when using a DCE, whilst there are management fees and costs associated with an investment in IBTC, which may impact your returns. It is important that investors carefully consider their investment objectives and seek professional advice before making any investment decisions.

What are some of the benefits of investing in IBTC?

As per the Product Disclosure Statement (PDS), here are some benefits of investing in IBTC to consider:

1. Exposure to bitcoin: IBTC provides investors with exposure to bitcoin (please also see ‘What is Bitcoin?’ in our FAQ section).

2. Professional management: The Fund is managed by Monochrome Asset Management Pty Ltd, which has deep experience in managing digital assets.

3. Diversification: Investing in IBTC enables investors to diversify beyond traditional asset classes into the nascent digital crypto-assets space by accessing the largest and best established crypto-asset, bitcoin.

4. Accessibility: IBTC is available via a simple online application process available at https://apply.automic.com.au/ibtc or through a paper application available by contacting investor-services@monochrome.co.

It is important to carefully consider your investment objectives and seek professional advice before making any investment decisions and note that there are risks involved when investing in IBTC.

What are some of the risks of investing in IBTC?

As per the Product Disclosure Statement (PDS), here are some risks of investing in IBTC to consider:

• Market Risk: High volatility in Bitcoin prices can lead to significant fluctuations in your investment value.

• Regulatory Risk: Changes in regulations or legal frameworks can impact the ETF’s operations and value.

• Custody Risk: Security breaches at the custodian level could result in loss or theft of bitcoin.

• Liquidity Risk: Difficulty in buying or selling shares at desired prices during certain market conditions.

• Operational Risk: Risks from technology failures, cybersecurity breaches, and administrative errors.

• Pricing Risk: Issues with the benchmark’s calculation can affect ETF pricing.

• Service Provider Risk: Failure of key service providers could adversely affect ETF performance.

• Currency Risk: Fluctuations in the AUD/USD exchange rate can impact investment value.

• Taxation Risk: Changes in tax laws could affect the tax treatment of your investment.

• Product Risk: As a new product, unforeseen challenges could arise.

Please carefully consider your investment objectives and seek professional advice before making any investment decisions. It is important to note that the above list of risks is not comprehensive, and there may be other risks associated with investing in IBTC. Please see the PDS for more information.

Are there any restrictions on investing in IBTC?

There are no specific restrictions mentioned for investing in IBTC beyond general eligibility requirements. However, investors should ensure they meet the standard criteria for opening a brokerage account and comply with regulatory requirements applicable to their situation. It is advisable to consult the Product Disclosure Statement and Target Market Determination for detailed information and ensure the investment aligns with their financial objectives and risk tolerance.

Who is the investment manager for IBTC?

Monochrome Asset Management Pty Ltd (‘Monochrome’) is the Investment Manager of the Monochrome Bitcoin ETF (IBTC). Monochrome is a Corporate Authorised Representative (CAR number 1286428) of Vasco Trustees Limited (Australian financial services number 344486).

What are the different types of investors that can invest in IBTC?

IBTC is designed to be accessible to a variety of investors, including:

• Individual Investors: Retail investors who want to add Bitcoin exposure to their personal investment portfolios without the complexities of direct ownership and custody.

• Institutional Investors: Entities such as hedge funds, asset managers, and financial institutions seeking regulated and secure exposure to Bitcoin.

• Self-Managed Super Funds (SMSFs): Trustees of SMSFs looking to diversify their retirement portfolios with bitcoin, benefiting from the ETF's regulatory compliance and professional management.

• Financial Advisors and Planners: Professionals who wish to offer their clients a straightforward and compliant way to invest in Bitcoin through a regulated financial product.

These investors can access IBTC through most Australian stock brokerage apps and platforms, ensuring broad availability and ease of investment.

It is important to note that investing in IBTC involves risks, including the risk of loss of capital. You should carefully consider your investment objectives and seek professional advice before making any investment decisions.

Will I receive any communication about my application for investing directly in the fund?

Once your application to invest in IBTC is accepted and your application amount has been received, you will receive an emailed confirmation of your investment. This confirmation will include details of your investment, such as the number of Bitcoin Interests you have acquired and the price paid per Bitcoin Interest.

In addition, you will receive regular statements that provide information about your investment, including its value, typically on a quarterly and annual basis.

If there are any changes to your personal details or circumstances that may affect your investment in IBTC, such as a change of address or a change in your SMSF's eligibility status, you should notify the registry provider via the investor portal as soon as possible.

It is important to keep all documentation related to your investment in IBTC in a safe place for future reference. If you have any questions about your investment or require further information, you should refer to the registry’s investor portal, see the information located on the IBTC product page, or seek professional advice.

When will I receive my Bitcoin Interests?

Once you have placed an order for IBTC units through Cboe Australia or directly through the fund’s registry, you will receive your Bitcoin Interests upon the successful execution and settlement of your trade. The exact timing can depend on the specific processes of your brokerage platform or the fund’s registry, but typically, it will be within a few business days following your transaction.

For precise details on the timing of receiving your Bitcoin Interests, please refer to the Product Disclosure Statement or consult with your broker or the fund’s registry.

How will I be informed about the performance of IBTC?

Investors will receive performance information through:

• Monochrome Website: Regular updates and performance reports.
• Cboe Website: Real-time price updates and historical data.
• Financial Statements: Periodic financial statements.
• Brokerage Platform: Monitor performance through your brokerage platform.
• Investor Communications: Newsletters and market updates.

For detailed performance information, refer to the Product Disclosure Statement and the IBTC product page, or consult your financial advisor.

It is important to note that past performance is not indicative of future performance, and there are risks associated with investing in IBTC. You should carefully consider your investment objectives and seek professional advice before making any investment decisions.