Recent Developments in Crypto ETFs

In recent weeks, there has been a growing number of crypto ETF proposals and developments worth noting.

Launch of US Crypto Index ETFs

US crypto index ETFs are now live in their earliest forms. Notably, Franklin Templeton’s EZPZ ETF, which offers convenient exposure to both Bitcoin (BTC) and Ethereum (ETH), has been introduced, joining the Hashdex Nasdaq Crypto Index US ETF that launched on Valentine’s Day. This dual BTC-ETH exposure represents the initial iteration of these products, with expectations of further developments.

New Digital Assets on the Horizon

A recent Tuesday 19b-4 filing indicates that the Hashdex fund aims to add seven additional digital assets: Solana (SOL), XRP, Cardano (ADA), Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), and Uniswap (UNI). Hashdex CIO Samir Kerbage anticipates that retail and professional investors will seek diversification similar to traditional asset classes, as they may not want to individually research each asset.

SEC Acknowledgment of Single-Asset ETFs

On the same day as the 19b-4 filing, the SEC acknowledged various proposed single-asset ETFs, signaling that they are seriously considering them. There are discussions about a potential litecoin ETF being approved next.

MAGA Seven

In addition to the well-known Magnificent Seven stocks, Defiance ETFs announced the creation of the “MAGA Seven,” comprising stocks expected to benefit from Trump’s presidency. The specific companies included have yet to be disclosed, but some speculate that Coinbase (COIN) and MicroStrategy (MSTR) could be featured.

Modifications to Existing ETFs

Changes are also occurring for existing bitcoin and ether ETFs. For instance, Grayscale and 21Shares submitted filings to allow their ether ETFs to start staking the ETH held. Additionally, Nasdaq filed for the SEC to permit in-kind creations and redemptions for BlackRock’s bitcoin ETF, while Cboe submitted similar proposals for VanEck funds.

Considerations for Future Changes

As Hester Peirce has pointed out, before these modifications can be implemented, the SEC must resolve issues related to custody and other operational matters.