Monochrome Bitcoin Trust - FAQs

What are ‘Bitcoin Interests’ in the Monochrome Bitcoin Trust?

Bitcoin Interests are beneficial interests in an amount of bitcoin referred to as the ‘Bitcoin Allocation’. Each Bitcoin Allocation represents the beneficial interest in bitcoin that is held by the Responsible Entity in a bare trust for the relevant Holder. The Bitcoin Allocation for each Bitcoin Interest will be calculated daily to six decimal places and shall be published on the IBTC page.

The Monochrome Bitcoin Trust (IBTC) issues Bitcoin Interests to investors, giving them an absolute entitlement to an underlying amount of bitcoin in each Bitcoin Interest. At the inception of the Monochrome Bitcoin Trust (IBTC), each Bitcoin Interest comprised 10,000 sats (a ‘sat’ or a ‘satoshi’ being the smallest denomination of bitcoin) or 0.0001 bitcoin, reducing daily for management fees.

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.

How do I know if I am eligible to apply?

The Monochrome Bitcoin Trust (IBTC) is open to all investors over 18 years of age that receive the Product Disclosure Statement (electronically or otherwise) in Australia. Before applying, investors should read the Product Disclosure Statement, Reference Guide and satisfy the criteria of the Target Market Determination. The documents are available at https://www.monochrome.au/products/monochrome-bitcoin-trust.

What is the minimum I can invest?

The minimum initial investment amount for the Monochrome Bitcoin Trust (IBTC) is $5,000, with minimum additional contributions of $1,000. There is no maximum investment amount.

How do I apply to invest in the Monochrome Bitcoin Trust (IBTC)?

To apply for the Monochrome Bitcoin Trust (IBTC), please complete the online Application Form available at https://apply.automic.com.au/ibtc and provide the associated identification documents to the Registry along with payment for the purchase of Bitcoin Interests. Please note that cash cannot be accepted, and all application money must be in Australian dollars. If you have any questions or require assistance with your application, please contact the Unit Registry or refer to the Product Disclosure Statement available at https://www.monochrome.au/products/monochrome-bitcoin-trust.

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 the Monochrome Bitcoin Trust (IBTC)?

Yes. The Monochrome Bitcoin Trust (IBTC) can accept 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, Reference Guide and Target Market Determination, 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 the Monochrome Bitcoin Trust (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 the Monochrome Bitcoin Trust (IBTC) and buying bitcoin on a digital currency exchange?

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

Firstly, with regards to custody, when investors purchase Bitcoin Interests in the IBTC, the underlying bitcoin is securely custodied with a regulated and insured custodian, Gemini Trust. Furthermore, the contract governing the custody arrangement meets the strict requirements applied by the Australian Securities and Investments Commission (ASIC) in relation to the safekeeping of assets on behalf of retail investors as set out in ASIC’s Regulatory Guide 133. 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.

Secondly, with regards to regulation, the Monochrome Bitcoin Trust (IBTC) is a fully regulated and registered managed investment scheme offered under an Australian financial services licence with a specific crypto-asset authorisation, whereas DCEs operate largely outside the regulated perimeter overseen by 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 the Monochrome Bitcoin Trust (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 the Monochrome Bitcoin Trust (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 the Monochrome Bitcoin Trust (IBTC)?

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

1. Exposure to bitcoin: Monochrome Bitcoin Trust (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 Monochrome Bitcoin Trust (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 to wholesale and retail investors via a simple online application process available at https://apply.automic.com.au/ibtc.

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 Monochrome Bitcoin Trust (IBTC).

What are some of the risks of investing in the Monochrome Bitcoin Trust (IBTC)?

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

1. Bitcoin market risk: The price of bitcoin can be volatile and may be affected by a range of factors, including market sentiment, regulatory changes, and technological developments.

2. Liquidity risk: The Fund may not be able to sell bitcoin at a fair price or may not be able to sell bitcoin when it needs to meet redemption requests.

3. Operational risk: The Fund's operations may be disrupted by events such as cyber-attacks, system failures, or natural disasters.

4. Regulatory risk: Changes in laws and regulations governing digital currencies could adversely affect the Fund's operations and performance.

5. Counterparty risk: The Fund is exposed to counterparty risk when dealing with service providers such as custodians and exchanges.

6. Currency risk: The Fund invests in bitcoin, which is denominated in a currency other than Australian dollars. Changes in exchange rates could affect the value of the Fund's investments.

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 Monochrome Bitcoin Trust (IBTC).

Are there any restrictions on investing in the Monochrome Bitcoin Trust (IBTC)?

Investors must be 18 years or older and make an initial contribution of $5,000 or more. Investors need to complete an online application form, which includes answering six simple questions relating to the fund’s ‘Target Market’.

Issuers of financial products are required by the Australian Securities and Investments Commission to prepare a Target Market Determination (TMD) to help identify the type of investor that the product is suited to. The Monochrome Bitcoin Trust’s (IBTC) TMD is available here.

In addition, there may be restrictions on investing in IBTC based on your country of residence or citizenship. It is important to carefully review the Product Disclosure Statement and seek professional advice before making any investment decisions.

Who is the investment manager for the Monochrome Bitcoin Trust (IBTC)?

Monochrome Asset Management Pty Ltd (‘Monochrome’) is the Investment Manager of the Fund. 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 the Monochrome Bitcoin Trust (IBTC)?

The Product Disclosure Statement provides information about the different types of investors that may be eligible to invest in the Monochrome Bitcoin Trust (IBTC), including:

• Individuals investors.
• Companies.
• Trustees including for self managed superannuation funds and companies.
• Other eligible entities such as partnerships and associations.

It is important to note that investing in the Monochrome Bitcoin Trust (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 after I have made an investment?

Once your application to invest in the Monochrome Bitcoin Trust (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 the Monochrome Bitcoin Trust (IBTC), such as a change of address or a change in your self managed superannuation fund's eligibility status, you should notify the Fund’s registry provider via the investor portal as soon as possible.

It is important to keep all documentation related to your investment in the Monochrome Bitcoin Trust (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 Fund's registry investor portal, see the information located at Monochrome Bitcoin Trust (IBTC), or seek professional advice.

When will I receive my Bitcoin Interests?

According to page 3 of the Product Disclosure Statement for the Monochrome Bitcoin Trust (IBTC), the timing of when you will receive your Bitcoin Interests depends on when your application is received and accepted by the Fund.

If your application is received and accepted and the application amount is received in cleared funds in the Registry’s bank account before 1:00pm on a Business Day, you will generally receive the Application Price calculated for that Business Day. If your application is received and accepted and the application amount is received in cleared funds in the Registry’s bank account after 1:00pm, or on a day that is not a Business Day, you will generally receive the Application Price calculated for the following Business Day.

Once your application has been accepted and processed, you will receive a confirmation of your investment that includes details of your Bitcoin Interests.

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.

How will I be informed about the performance of the Monochrome Bitcoin Trust (IBTC)?

The Investment Manager provides monthly investor reports and market updates, which are available to download on the IBTC product page. The updates include information such as the Fund's net asset value, investment returns and other relevant information about the Fund's operation.

Fund performance is additionally shown within the Automic registry portal. The investor portal is accessible here.

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