Approval of Crypto Index ETFs

The U.S. Securities and Exchange Commission (SEC) has approved filings from the Nasdaq and Cboe BZX Exchange to list and trade shares of crypto index exchange-traded funds (ETFs) from Hashdex and Franklin Templeton.

Details of the ETFs

Both the Hashdex Nasdaq Crypto Index US ETF and Franklin Crypto Index ETF will primarily hold spot Bitcoin and spot Ether in an 80/20 market cap-weighted ratio. They are expected to launch in January, according to Bloomberg ETF analyst Eric Balchunas. He noted, “The spot bitcoin/ether combo ETFs have been approved by the SEC (as predicted).”

Market Reaction

Nate Geraci, president of The ETF Store, mentioned that it will be interesting to see if companies like BlackRock follow suit with similar ETFs, highlighting that there is considerable demand for diversified products in the crypto asset space.

The SEC's approval was based on the similarities of these funds to previously approved Bitcoin and Ethereum ETFs in the U.S. They stated, “The representations in their respective amended filings are substantially similar to those of the spot bitcoin ETP and spot ether ETP.”

Significance of the Approval

The Hashdex and Franklin Templeton funds mark the first crypto index ETFs to receive SEC approval in the U.S. Hashdex submitted its S-1 registration in July 2023 after Nasdaq filed a form for the fund. The SEC had initially postponed its decision but ultimately approved both ETFs shortly afterward. Future eligibility of other cryptocurrencies like AVAX, LINK, and LTC was also hinted at, pending regulatory approval.

ETF Details

• Hashdex Nasdaq Crypto Index US ETF will trade under the ticker NCIQ.
• Franklin Crypto Index ETF will trade under the ticker EZPZ.
• Core custodians for both funds will be BitGo, Coinbase, Fidelity, and Gemini.

Expanding Crypto ETF Market

The SEC recently approved 11 spot Bitcoin ETFs, which began trading with significant net inflows, amassing more than $36 billion in total. Although spot Ethereum ETFs have attracted lesser interest, they still brought in $2.4 billion since their launch in July.

Franklin's EZBC spot Bitcoin ETF has garnered $461.5 million, while its spot Ethereum product, EZET, has attracted $41.5 million. Meanwhile, Hashdex's spot Bitcoin ETF has raised $0.7 million since its conversion.

There are speculations about upcoming approvals for Solana and XRP ETFs under a potentially pro-crypto administration, but analysts suggest that Litecoin and Hedera may be next in line.