Hashdex has updated its S-1 application for the Hashdex Nasdaq Crypto Index US exchange-traded fund (ETF) for the second time. The amendment follows a request from the United States Securities and Exchange Commission (SEC) for additional review. Hashdex initially submitted the registration statement on June 24, with the latest revision filed on November 25.
Hashdex’s Revised Filing and Portfolio Focus
Under its amended S-1 application, the Hashdex Nasdaq Crypto Index US ETF will invest solely in Bitcoin and Ethereum. The ETF that Hashdex arranges will not trade tokenized assets, stablecoins, or any other security linked to crypto markets. If future changes occur, additional assets might be added to the portfolio.
SEC regulatory oversight created delays in approval because the agency needed to evaluate possible market risks. When Hashdex requested more time in August, the agency evaluated its proposal submission further. The approval of this ETF would establish it as the first U.S. fund to offer diversified exposure to physical cryptocurrencies.
After Bitcoin and Ethereum spot ETFs succeeded, analysts predict that diversified crypto index ETFs will become more popular in the market. The Hashdex ETF tracks a wide cryptocurrency index that offers investors diversified digital asset exposure.
Franklin Templeton’s Crypto Index ETF Delay
Franklin Templeton’s Crypto Index ETF is another proposal facing delays from the SEC. The firm submitted its filing in August, intending to track the CF Institutional Digital Asset Index. Due to regulatory constraints, this ETF also limits its initial holdings to Bitcoin and Ethereum.
The SEC postponed its decision on Franklin Templeton’s application on November 20, citing a lack of public comments on the rule change. The new deadline for the approval or rejection of this ETF is January 6, 2025. Regulatory authorities remain cautious about approving diversified crypto funds despite increasing market demand.
If approved, the Franklin Templeton ETF would compete with Hashdex’s offering in providing diversified exposure. Like Hashdex, it may expand its holdings over time, depending on regulatory developments.
Grayscale’s Digital Large Cap Fund Conversion
The Digital Large Cap Fund managed by Grayscale has filed an application to become an ETF. Established in 2018, the fund currently possesses Bitcoin, Ethereum, Solana, and XRP as its assets. The rising market interest in supervised crypto index fund products motivates this transformation.
The conversion of Grayscale’s ETF will provide retail alongside institutional investors with direct access to diversified crypto investments. The firm operates as a cryptocurrency industry leader through asset management services and it transformed its Bitcoin Trust into a spot Bitcoin ETF. The SEC faces crucial regulatory hurdles for considering approval of crypto index ETFs.
The SEC has shown reduced speed in reviewing over a dozen crypto-linked ETF applications that are currently under its evaluation. The proposed changes involve introducing staking mechanisms and trading options with in-kind redemption options. Regulatory approvals of these filings would lead to an influx of new investment products operating in cryptocurrency.
FAQs
What is a Crypto Index ETF?
A crypto index ETF is an investment fund that tracks a basket of cryptocurrencies. It provides diversified exposure to digital assets by holding multiple tokens. This structure allows investors to gain broad market exposure without purchasing individual cryptocurrencies.
What cryptocurrencies will Hashdex’s ETF include?
The Hashdex Nasdaq Crypto Index US ETF will initially hold Bitcoin and Ethereum. The fund excludes stablecoins, tokenized assets, and other crypto-related securities. However, future updates may introduce additional cryptocurrencies.
Why did the SEC delay Franklin Templeton’s ETF?
The SEC delayed its decision on Franklin Templeton’s Crypto Index ETF due to a lack of public comments. The regulatory body assesses potential risks and market impact before making a final decision. The new deadline for approval is January 6, 2025.
How does Grayscale’s ETF proposal differ?
Grayscale aims to convert its Digital Large Cap Fund into an ETF. Unlike Hashdex and Franklin Templeton’s funds, it includes Solana and XRP alongside Bitcoin and Ethereum. The conversion would allow investors to trade shares of the fund more efficiently.
When will the SEC decide on these ETF filings?
The SEC has yet to finalize decisions on multiple crypto ETF applications. Franklin Templeton’s ruling is expected by January 6, 2025, while Hashdex’s remains under review. Other filings from major asset managers are also awaiting regulatory approval.
Glossary of Key Terms
Crypto Index ETF
A fund that tracks a group of cryptocurrencies, offering diversified exposure to digital assets.
Spot ETF
An ETF that directly holds underlying assets, such as Bitcoin or Ethereum, rather than futures contracts.
SEC (Securities and Exchange Commission)
The U.S. government agency responsible for regulating securities markets, including ETFs.
In-Kind Redemptions
A process that allows ETF investors to redeem shares for underlying assets instead of cash.
Stablecoin
A cryptocurrency designed to maintain a stable value by pegging to a reserve asset like the U.S. dollar.
Staking
The process of participating in blockchain network validation by holding and locking up cryptocurrency tokens.
Reference
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