The SEC has approved crypto index ETFs from Franklin Templeton and Hashdex, set to trade on the Cboe BZX and Nasdaq exchanges. These ETFs offer diversified exposure to cryptocurrencies by tracking the performance of multiple digital assets.
Franklin Templeton’s crypto index ETF proposal was approved by the Securities and Exchange Commission (SEC) on December 18, thereby enabling it to be traded on the Cboe BZX Exchange. The commission authorized Hashdex’s crypto index ETF the following day, and it is scheduled to trade on the Nasdaq stock market.
The updated filing of Franklin Templeton’s proposal was granted “accelerated approval” after it was determined to be “substantially similar” to previously authorized spot Bitcoin and Ether exchange-traded products and met the necessary requirements.
Crypto Index ETFs Effects
Investors are provided with a diversified exposure to the digital asset market through a singular investment vehicle, as crypto index ETFs monitor the performance of multiple cryptocurrencies. It replicates the performance of an underlying index by maintaining the same assets in comparable proportions.
Franklin Templeton’s product replicates the performance of the Institutional Digital Asset Index, while Hashdex’s Crypto Index ETF will monitor the Nasdaq Crypto US Settlement Price Index. Both indexes concentrate on spot Bitcoin and Ether.
Franklin Templeton submitted its filing for the Franklin Crypto Index ETF in August, while Hashdex had initially submitted its S-1 in June and subsequently submitted an amended application on Nov. 25.
The SEC had previously requested additional time to evaluate both proposals, citing the necessity of a comprehensive evaluation. Hashdex and Franklin Templeton addressed these concerns by submitting revised filings that, according to the commission’s Dec. 19 notice, were in accordance with regulatory requirements intended to safeguard investors, prevent fraud and manipulation, and maintain the integrity of the market.
The funds are “likely” to be operational in January, with Bitcoin comprising approximately 80% of the holdings and Ether 20%, according to Bloomberg analyst Eric Balchunas.
With the approval of the first crypto index funds, experts such as Nate Geraci, President of the ETF Store, anticipate that additional issuers will follow suit, as advisors seek diversification. They anticipate that there will be “meaningful demand” for these products.
A proposal to establish a spot Bitcoin and Ether ETP on the NYSE Arca was submitted by Bitwise to the SEC last month. According to a Nov. 26 statement from the asset manager, the fund’s objective is to offer investors a proportionate exposure to the two largest crypto assets in an easily accessible format.
These developments are in concert with the upcoming leadership changes at the SEC, as Chair Gary Gensler has announced his resignation, effective January 20, 2025, the day President-elect Donald Trump is scheduled to assume office.
