Hashdex Seeks SEC Approval for Bitcoin and Ethereum ETF

Hashdex, an asset management firm, has proposed a new exchange-traded fund (ETF) to the US Securities and Exchange Commission (SEC) that combines spot Bitcoin (BTC) and Ethereum (ETH). Named the Hashdex Nasdaq Crypto Index US ETF, this product aims to offer investors direct exposure to the two leading cryptocurrencies. This initiative represents a significant move toward integrating crypto assets into traditional financial markets.

The proposal, detailed in a recent 19b-4 filing, states that the ETF’s assets will consist exclusively of Bitcoin and Ethereum, with cash held solely to cover expenses. The ETF will employ a passive investment strategy, tracking the Nasdaq Crypto US Settlement Price Index (NCIUSS). This straightforward approach makes it appealing for both experienced traders and newcomers. Coinbase and BitGo will provide custody for the Bitcoin and Ethereum holdings.

As of May 27, 2024, the ETF’s index constituents were 70.54% BTC and 29.46% ETH. This market cap-weighted structure offers balanced exposure to both major cryptocurrencies. Hashdex’s filing aligns with other potential spot Ethereum ETF issuers, stating that neither the fund nor any affiliated parties will engage in Ethereum staking. The SEC has 90 days to review the proposal, with a final decision anticipated by March 2025.

James Seyffart, an ETF analyst at Bloomberg Intelligence, highlighted the ETF’s market cap-weighted structure and its potential to include other SEC-approved digital assets in the future. He noted, “Hashdex already has a crypto index ETF traded in Brazil, holding primarily Bitcoin and Ethereum. Bringing this to the US market makes complete sense as a future goal.”

Despite the innovative approach, some in the crypto community expressed skepticism about combining Bitcoin with other digital assets in the ETF. They argue that Bitcoin's unique attributes could be diluted. However, Seyffart defended the strategy, asserting that the ETF’s structure “makes a ton of sense” for investors seeking diversified exposure to digital assets.

Approving the Hashdex Nasdaq Crypto Index US ETF would mark a significant milestone in the spot crypto fund segment. The crypto market is currently eager for the approval of spot Ethereum ETFs. SEC Chairman Gary Gensler has suggested that these ETFs might receive approval during the summer, although he did not specify a 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.

Hashdex’s ETF proposal represents a critical step toward the mainstream adoption of crypto assets in traditional financial markets. By offering a combined Bitcoin and Ethereum ETF, Hashdex aims to simplify the investment process, making it more accessible to a broader range of investors. This could pave the way for greater acceptance and integration of cryptocurrencies into conventional investment portfolios.

The ETF’s passive investment strategy, which tracks the Nasdaq Crypto US Settlement Price Index, provides a straightforward and transparent way for investors to gain exposure to Bitcoin and Ethereum without the need for active management. This approach reduces complexity and makes it easier for investors to understand and engage with the product.

The SEC’s decision on the Hashdex Nasdaq Crypto Index US ETF will be closely watched by the crypto and financial communities. If approved, it could set a precedent for future crypto ETFs, potentially leading to a broader range of investment products that include various digital assets. This would further enhance the legitimacy and acceptance of cryptocurrencies within traditional finance.

In conclusion, Hashdex’s proposal for a combined spot Bitcoin and Ethereum ETF is a significant development in the ongoing effort to bring crypto assets into mainstream financial markets. The SEC’s decision, expected by March 2025, will be a crucial indicator of the future direction of crypto regulation and its integration into traditional investment frameworks. If successful, this ETF could become a cornerstone for diversified crypto investment, making it easier for investors to participate in the growing digital asset market.