SEC Approves First Crypto Index ETFs

The U.S. Securities and Exchange Commission 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.

Both the Hashdex Nasdaq Crypto Index US ETF and Franklin Crypto Index ETF will initially hold spot Bitcoin and spot Ether based on their respective market capitalizations, with an approximate 80/20 split in Bitcoin’s favor. These funds are likely to launch in January, as indicated by Bloomberg ETF analyst Eric Balchunas, who noted, “The spot Bitcoin/Ether combo ETFs have been approved by the SEC (as predicted). Launch likely in January. They’re market cap weight, so 80/20 BTC/ETH approx. Notable that Hashdex and Franklin are first. Good for them.”

Nate Geraci, President of The ETF Store, mentioned, “It will be interesting to see if BlackRock or others attempt to piggyback on this and launch similar ETFs. Regardless, I expect that there will be meaningful demand for these products. Advisors LOVE diversification, especially in an emerging asset class such as crypto.” He also highlighted the SEC’s rationale for their approval, stating it’s similar to previously approved spot Bitcoin and Ethereum ETFs in the U.S.

First Crypto Index ETFs Approved in the U.S.

The Hashdex and Franklin Templeton funds are the first crypto index ETFs to be approved in the U.S. Hashdex initially filed its S-1 registration statement with the SEC in July, following Nasdaq’s filing of a 19b-4 form for the fund in June. The SEC initially postponed its decision before granting approval.

According to Hashdex’s amended S-1 filing in November, they indicated that other cryptocurrencies such as AVAX, LINK, and LTC could be included in the future pending regulatory approval. The Hashdex Nasdaq Crypto Index US ETF will trade under the ticker NCIQ, with core custodians being BitGo, Coinbase, Fidelity, and Gemini.

Franklin Templeton filed its S-1 for its ETF in August and also faced an initial delay in November before receiving approval. Franklin’s fund will trade under the ticker EZPZ and could incorporate additional cryptocurrencies as regulatory approvals are secured.

The Growing U.S. Crypto ETF Market

On January 11, the SEC approved proposals for 11 spot Bitcoin ETFs on an accelerated basis, which began trading the next day. These include ETFs from Ark Invest/21Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Invesco, Valkyrie (now CoinShares), VanEck, and WisdomTree. Since then, the combined spot Bitcoin funds have attracted over $36 billion in net inflows, with approximately $110 billion in assets under management due to Bitcoin’s significant price rise this year.

While the U.S. spot Ethereum ETFs have not done as well, they have generated a combined $2.4 billion in total net inflows since trading commenced in July, with $12 billion in AUM, according to data compiled by The Block.

Franklin’s EZBC spot Bitcoin ETF has achieved $461.5 million in total net inflows, while their spot Ethereum product, EZET, has garnered $41.5 million. Hashdex’s spot Bitcoin ETF, DEFI, attracted $0.7 million since its conversion but decided against moving forward with their original spot Ethereum ETF proposal.

Speculation has increased regarding whether Solana and XRP will be the next ETF products approved in the U.S. under pro-crypto Donald Trump’s administration. Bloomberg ETF analyst James Seyffart noted that Solana and XRP ETFs may arrive after Litecoin and Hedera because the SEC hasn’t classified them as securities, but investor demand remains uncertain.