In Brief
- Hashdex proposes a spot crypto ETF combining Bitcoin and Ethereum.
- The ETF uses a passive investment strategy to track a crypto index.
- Coinbase and BitGo will secure custody of the ETF’s assets.
- The SEC’s final decision on this ETF is anticipated by March 2025.
Hashdex’s Ambitious Spot Crypto ETF Proposal
Asset manager Hashdex has taken a bold step by proposing a combined spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded fund (ETF) to the US Securities and Exchange Commission (SEC). This ETF, named Hashdex Nasdaq Crypto Index US ETF, aims to offer investors direct exposure to the two leading cryptocurrencies, marking a significant move towards the mainstream adoption of crypto assets in traditional financial markets.
The ETF will adopt a passive investment strategy to track the Nasdaq Crypto US Settlement Price Index (NCIUSS). This means it will hold Bitcoin and Ethereum without attempting to outperform the index. Cash will only be held to cover expenses, simplifying the process for investors. This approach makes the ETF an attractive option for both seasoned traders and newcomers.
Hashdex Seeks SEC Approval for Combined Spot Bitcoin and Ethereum ETF ⤵️ https://t.co/rEwehE7F5t
— Cryptribune (@cryptribune) June 19, 2024
Key Details of Hashdex’s ETF
According to a recent 19b-4 filing, the ETF’s assets will be comprised solely of Bitcoin and Ethereum. The ETF will use Coinbase and BitGo to secure custody of its Bitcoin and Ethereum holdings, ensuring robust security for its digital assets. As of May 27, 2024, the Index Constituents and their weightings were BTC at 70.54% and ETH at 29.46%.
Interestingly, the filing also notes that neither the fund nor any affiliated parties will engage in Ethereum staking. This aligns Hashdex’s filing with other potential spot Ethereum ETF issuers. The SEC has a 90-day window to review the proposal, with a final decision expected by March 2025.
James Seyffart, an ETF analyst at Bloomberg Intelligence, emphasized the market cap-weighted structure of the ETF. He pointed out that this structure could potentially include other SEC-approved digital assets in the future. Seyffart also mentioned that Hashdex already has a crypto index ETF traded in Brazil, holding 90% of its assets in Bitcoin and Ethereum. This makes the proposal to bring a similar product to the US market a logical next step.
Despite the innovative approach, some in the crypto community have expressed skepticism. They argue that conflating Bitcoin with other digital assets in the ETF might not be sensible. However, Seyffart defended the strategy, stating it makes a lot of sense for those seeking diversified exposure to digital assets. If approved, the Hashdex Nasdaq Crypto Index US ETF would be a significant milestone in the spot crypto fund segment.
Anticipation and Market Impact
The crypto market is eagerly awaiting the approval of spot Ethereum ETFs. BeInCrypto reported that SEC Chairman Gary Gensler hinted these ETFs might get the green light over the summer, though he did not provide a specific timeline for their trading debut. Meanwhile, Eric Balchunas, another ETF analyst at Bloomberg Intelligence, predicted that these funds might start trading as early as July 2.
The approval of the Hashdex Nasdaq Crypto Index US ETF could pave the way for more diversified crypto investment products in the market. This could potentially lead to increased adoption and integration of cryptocurrencies within traditional financial systems. For now, investors and the crypto community alike await the SEC’s decision, which could significantly influence the future landscape of crypto ETFs in the US.
