United States Securities and Exchange Commission (SEC) Approves Two Bitcoin and Ether Index ETFs
In a significant development for the cryptocurrency market, the United States Securities and Exchange Commission (SEC) has given the green light to Hashdex and Franklin Templeton’s respective Bitcoin and Ether index exchange-traded funds (ETFs). The approvals mark a major milestone in the history of cryptocurrency regulation and open up new investment opportunities for institutional investors.
Hashdex’s Nasdaq Crypto Index US ETF
On December 19, the SEC announced its approval of Hashdex’s Nasdaq Crypto Index US ETF, which will be listed on the Nasdaq stock market. This fund will track Bitcoin (BTC) and Ether (ETH), which are included in the Nasdaq Crypto US Settlement Price Index. The index is designed to provide a benchmark for digital asset prices and offers investors a diversified exposure to the cryptocurrency market.
Franklin Templeton’s Crypto Index ETF
In addition to Hashdex’s approval, the SEC also approved Franklin Templeton’s Crypto Index ETF, which will be listed on the Cboe BZX Exchange. This fund tracks the Institutional Digital Asset Index, a benchmark designed to represent the performance of digital assets such as Bitcoin and Ether. The index is calculated by Solactive AG and provides investors with exposure to a diversified portfolio of cryptocurrencies.
Similarities in Structure
Both Hashdex’s Crypto Index ETF and Franklin Templeton’s Crypto Index ETF have structures that are substantially similar to spot Bitcoin ETP and spot Ether ETP proposals already approved under previous SEC orders. This similarity is key, as it indicates that the SEC has found these funds to be in compliance with regulatory requirements.
SEC Approval on an ‘Accelerated Basis’
The SEC said that Franklin Templeton’s updated December 18 filing was approved on an "accelerated basis." This means that the regulator did not require the firm to wait for a standard approval period, but instead expedited the process due to the strong similarity between the proposed fund and existing spot ETPs.
Meeting Regulatory Requirements
The SEC approvals were based on the amended filings from both firms, which demonstrated compliance with regulatory requirements. The Exchange Act requires issuers to have rules in place to prevent fraudulent and manipulative acts, protect investors, and promote the public interest.
Potential Impact on Other Firms
Nate Geraci, president of The ETF Store, an investment adviser specializing in ETFs, speculated that the SEC’s approval may inspire other firms to copy the move. In a December 19 post on X, he said: "Will be interesting to see if BlackRock or others attempt to piggyback on this & launch similar ETFs." Geraci also noted that there will likely be strong demand for these products among investors.
Interest in Crypto Index ETFs
Franklin Templeton applied to the SEC for approval of its crypto index ETF in August, but the regulatory agency delayed the decision in November. Hashdex submitted its second amended application for an ETF on November 25, after filing its first amended S-1 in October at the request of the SEC.
Other Firms Looking to Launch Crypto Index ETFs
Franklin Templeton and Hashdex are not the only firms looking to launch a crypto index ETF in the United States this year. On November 26, the NYSE Arca requested to list a Bitwise ETF holding both Bitcoin and Ether. In October, NYSE Arca also expressed interest in listing a Grayscale crypto index ETF holding a diverse basket of spot cryptocurrencies.
Regulatory Considerations
US regulators indicated they were considering the listing for approval in November. This raises questions about the regulatory framework surrounding cryptocurrency investment products and whether firms will need to comply with additional requirements before launching similar funds.
Investment Opportunities
The approvals by the SEC open up new investment opportunities for institutional investors, including pension funds, endowments, and family offices. These investors can now gain exposure to a diversified portfolio of cryptocurrencies through these index ETFs.
Convergence of Traditional Finance and Cryptocurrency
The convergence of traditional finance and cryptocurrency is becoming increasingly evident, with regulators and industry players working together to develop regulatory frameworks that balance innovation and investor protection.
Investor Interest in Crypto Index ETFs
As the popularity of cryptocurrency investment products continues to grow, it’s likely that investors will be interested in these index ETFs as a way to gain exposure to digital assets while minimizing risk. With more firms looking to launch similar funds, we can expect to see increased demand for these products.
Regulatory Evolution
The approvals by the SEC mark an important step forward in the regulatory evolution of cryptocurrency investment products. As the market continues to evolve, regulators will need to adapt and innovate to ensure that investors are protected while also allowing for innovation and growth.
Future Developments
With the approvals of Hashdex’s Nasdaq Crypto Index US ETF and Franklin Templeton’s Crypto Index ETF, we can expect to see increased interest in crypto index ETFs. Firms such as BlackRock may follow suit and launch similar products, which will provide investors with even more options for gaining exposure to digital assets.
Conclusion
The approvals by the SEC mark a significant milestone in the history of cryptocurrency regulation. As the market continues to evolve, we can expect to see increased demand for crypto index ETFs among institutional investors. With more firms looking to launch similar funds, we can anticipate that this trend will continue into the future.
