Asset manager Hashdex has recently proposed a combined spot Bitcoin (BTC) and Ethereum (ETH) exchange-traded fund (ETF) to the US Security and Exchange Commission (SEC). The ETF, named Hashdex Nasdaq Crypto Index US ETF, aims to provide investors with direct exposure to the two leading cryptocurrencies.
This move marks a significant step towards the mainstream adoption of crypto assets in traditional financial markets.
Inside Hashdex’s Latest Spot Crypto ETF Filing
A recent 19b-4 filing reveals that the ETF’s assets will consist solely of Bitcoin and Ethereum, with cash held only to cover expenses. It will use a passive investment strategy to track the Nasdaq Crypto US Settlement Price Index (NCIUSS).
The strategy does not attempt to outperform it. Instead, this approach simplifies the process for investors, making it an attractive option for both seasoned traders and newcomers.
Read more: Crypto ETN vs. Crypto ETF: What Is the Difference?
Sasha Ivanov, Founder of Waves & Units, commented on the potential benefits of combining BTC and ETH into one financial product. He indicated that there are no major risks associated with this combination.
“This is a very interesting approach, which can potentially lead to the creation of a crypto index ETF, holding a portfolio of multiple crypto assets, based on certain criteria such as market capitalization or falling into a certain crypto narrative (DeFi, Gaming, etc.). It’s also worth noting that an Ethereum ETF has not been fully approved yet, and ETH essentially ‘piggybacks’ on the approved Bitcoin asset to be included in the ETF. This strategy can be used for other assets in the future as well, allowing for the creation of composite index funds,” he elaborated to BeInCrypto.
The ETF will use Coinbase and BitGo to secure custody of its Bitcoin and Ethereum holdings. Furthermore, the filing outlined that as of May 27, 2024, the Index Constituents and their weightings were BTC at 70.54% and ETH at 29.46%.
Hashdex’s filing also aligns with other potential spot Ethereum ETF issuers. It states 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 expected by March 2025.
James Seyffart, an ETF analyst at Bloomberg Intelligence, also commented on Hashdex’s filing. He emphasizes its market cap-weighted structure and potential for including other SEC-approved digital assets.
“Hashdex already has a crypto index ETF that’s traded down in Brazil. These are the assets it currently holds and their weights in the fund. 90% is Bitcoin and Ethereum. So bringing something like this to the US makes complete sense as a future goal,” he noted.
Despite Hashdex’s novel approach, some in the crypto community expressed skepticism. They said that conflating Bitcoin with other digital assets in the ETF is nonsensical.
However, Seyffart defended the strategy. He argued that the ETF’s structure “makes a ton of sense” for those seeking diversified exposure to the digital asset. Nonetheless, approving a fund like Hashdex Nasdaq Crypto Index US ETF would mark another milestone in the spot crypto fund segment.
Read more: Ethereum ETF Explained: What It Is and How It Works
Currently, the crypto market eagerly anticipates spot Ethereum ETFs’ approval. BeInCrypto reported that SEC Chairman Gary Gensler indicated these ETFs might receive approval over the summer. Yet, he did not specify a timeline for their trading debut.
Meanwhile, Eric Balchunas, another ETF analyst at Bloomberg Intelligence, predicted that the funds might start trading as early as July 2.
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