In a significant milestone for the cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) has approved the first spot ETFs combining Bitcoin and Ethereum. This marks a major step forward after months of regulatory reviews.
On December 19, the SEC authorized the Hashdex Nasdaq Crypto Index US ETF for trading on the Nasdaq stock market and the Franklin Crypto Index ETF for listing on the Cboe BZX Exchange.
Bitcoin and Ether ETFs Approved
Both ETFs will directly hold spot Bitcoin and Ethereum, providing investors with exposure to the two largest cryptocurrencies by market capitalization.
- Franklin Crypto Index ETF: Tracks the Institutional Digital Asset Index, which measures the performance of assets like Bitcoin and Ether.
- Hashdex Crypto Index ETF: Follows the Nasdaq Crypto US Settlement Price Index, focusing on Bitcoin and Ether.
These ETFs are market-cap weighted, with an allocation of approximately 80% to Bitcoin and 20% to Ethereum, offering diversified exposure to digital assets.
January Launch Expected
Eric Balchunas, a senior Bloomberg ETF analyst, has predicted a January 2024 launch for both ETFs.
The approval was based on amended filings, aligning with the SEC’s earlier approvals for spot Bitcoin and Ether products. The SEC highlighted that:
- The spot Bitcoin market closely correlates with the CME Bitcoin futures market.
- The spot Ether market shows similar alignment with the CME Ether futures market.
The SEC concluded that surveillance-sharing agreements between the exchanges and CME would effectively detect and prevent fraudulent or manipulative activities, ensuring compliance with Exchange Act standards.
Hashdex’s Vision for Diversification
Hashdex plans to broaden its ETF offerings by incorporating other major cryptocurrencies like Solana and Cardano in the future. This strategy aims to minimize the volatility associated with single-asset ETFs while attracting a more diverse investor base.
The multi-asset ETF approach is designed to appeal to both risk-averse investors and those seeking broader exposure to the crypto market.
“Diversification is key in emerging asset classes like crypto,” said Nate Geraci, president of The ETF Store. “Advisors love the simplicity and security ETFs bring to the table.”
What This Means for the Crypto Market
ETFs offer a regulated, straightforward investment vehicle for gaining exposure to digital assets, and the approval of Bitcoin-Ether ETFs signals increasing acceptance of cryptocurrencies in traditional financial markets.
With Hashdex and Franklin Templeton leading the charge, the stage is set for other major firms like BlackRock to potentially follow suit, introducing similar diversified crypto ETFs to the market.
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