Amid yesterday's cryptocurrency market crash, the US Securities and Exchange Commission (SEC) approved the first bitcoin (btc) and ethereum (eth) dual index exchange-traded funds (ETFs) from Franklin Templeton and Hashdex. The ETFs are scheduled to launch in January 2025.
SEC Approves First bitcoin–ethereum Dual Index ETFs
For the first time, the US financial regulator approved hybrid bitcoin–ethereum index ETFs. The Hashdex crypto Index ETF will be listed on Nasdaq, while the Franklin Templeton crypto Index ETF will be listed on the Cboe BZX Exchange.
Both ETFs will hold btc and eth spot in ratios that reflect their respective market caps, currently resulting in an 80:20 ratio favoring bitcoin. However, the ETFs may be expanded to include other cryptocurrencies in the future, depending on regulatory approval.
The SEC noted that Franklin Templeton's Dec. 18 filing received accelerated approval. Commenting on the development, Nate Geraci, President of The ETF Store, <a target="_blank" href="https://x.com/NateGeraci/status/1869879340810285097″ target=”_blank” rel=”noopener nofollow”>saying:
It will be interesting to see if BlackRock or others try to take advantage of this and launch similar ETFs. Regardless, I expect there to be significant demand for these products. Advisors love diversification. Especially in an emerging asset class like cryptocurrencies.
Geraci emphasized the possible rationale behind the SEC's decision to approve crypto index ETFs, noting their similarities to previously approved bitcoin and ethereum spot ETFs in terms of trust structure and operating terms.
The SEC added that the proposals for both ETFs aligned with the criteria established by the Exchange Act. For the uninitiated, the Exchange Act requires issuers to implement safeguards against fraud, manipulation and risks to investors.
Details about crypto Index ETFs
Asset manager Hashdex first amended its S-1 filing with the SEC in October and filed a second amended filing on November 25. Franklin Templeton filed its S-1 for the crypto index ETF in August.
In Hashdex's November filing, the company stated that other digital assets, such as Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC), may meet its eligibility criteria and could be added to the ETF in the future with approval regulatory. The Franklin Templeton ETF also leaves room to add other cryptocurrencies, but did not specify any by name.
In particular, the Hashdex ETF will rely on the custody services of Coinbase, BitGo, Fidelity, and Gemini. Similarly, the Franklin Templeton ETF will use BitGo and Coinbase as its primary custodians.
The crypto ETF space is becoming increasingly competitive, thanks to its resounding success since its inception. launch earlier this year. Experts opine that US-based cryptocurrency spot ETFs may soon surpass gold spot ETFs in terms of net assets held.
After the United States, other countries in the world are also warming up to the idea of regulated crypto ETFs. At press time, btc is trading at $95,824, down 4.8% in the last 24 hours.
Featured image from Unsplash.com, chart from TradingView.com
