Emily Walker
During the recent downturn in the cryptocurrency market, the US Securities and Exchange Commission (SEC) greenlit the launch of the inaugural dual Bitcoin (BTC) and Ethereum (ETH) index exchange-traded funds (ETFs) from Franklin Templeton and Hashdex. These ETFs are set to debut in January 2025.
SEC Greenlights Dual Bitcoin-Ethereum Index ETFs
This marks a significant milestone as the US financial authority approves hybrid Bitcoin-Ethereum index ETFs for the first time. Hashdex’s Crypto Index ETF will list on Nasdaq, while Franklin Templeton’s Crypto Index ETF is set to be offered on the Cboe BZX Exchange.
Both ETFs will contain spot BTC and ETH, proportionate to their market capitalizations, which currently shows an 80:20 split favoring Bitcoin. There is potential for including additional cryptocurrencies in the future, pending necessary regulatory permissions.
The SEC noted that Franklin Templeton’s application filed on December 18 was fast-tracked for approval. Nate Geraci, President of The ETF Store, reflected on this recent development by stating:
It’ll be fascinating to see if BlackRock or others follow suit and launch similar ETFs. Regardless, I anticipate strong interest in these assets. Advisors appreciate having diversification, especially in an up-and-coming market like crypto.
Geraci underlined the reasoning behind the SEC’s nod to approve these crypto index ETFs, as they share structural similarities with previously sanctioned spot Bitcoin and Ethereum ETFs.
The SEC further clarified that both ETF proposals adhered to the established criteria outlined by the Exchange Act, which mandates issuers to have protections against fraud, manipulation, and potential risks to investors.
Insights on the Crypto Index ETFs
Asset management firm Hashdex modified its S-1 application with the SEC in October and followed up with a second amendment on November 25. Franklin Templeton submitted its S-1 for the crypto index ETF back in August.
In Hashdex’s November document, it indicated that other cryptocurrencies like Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC) might meet future eligibility requirements and could be incorporated into the ETF upon obtaining regulatory consent. Conversely, Franklin Templeton’s ETF leaves open the possibility of adding more cryptocurrencies but does not specify which.
Importantly, Hashdex’s ETF will utilize custodianship from Coinbase, BitGo, Fidelity, and Gemini, while Franklin Templeton’s ETF will primarily engage with BitGo and Coinbase for custodial services.
The competition in the crypto ETF sector is heating up, fueled by their notable success since launching earlier this year. Experts predict that US-based crypto spot ETFs may soon surpass traditional spot gold ETFs in net asset volume.
Following the US’s lead, other nations are gradually embracing the concept of regulated crypto ETFs. As of the latest data, BTC is trading at $95,824, reflecting a 4.8% decrease over the past 24 hours.
