Digital asset manager Hashdex has made significant strides toward launching a pioneering exchange-traded fund (ETF) in the United States that combines Bitcoin and Ether, with the potential to include other cryptocurrencies in the future. This initiative marks a critical development in the integration of major digital assets into regulated financial instruments.
On June 24, Hashdex filed an S-1 registration statement for the “Hashdex Nasdaq Crypto Index US ETF.” This ETF aims to track the Nasdaq Crypto US Settlement Price Index, which represents the daily closing value of a broad segment of the digital asset market. Initially, the ETF will focus on Bitcoin and Ether, which are the primary constituents of this index.
Strategy for Asset Inclusion
The S-1 filing reveals that while the ETF will initially include only Bitcoin and Ether, there is a provision for expanding its portfolio to encompass additional cryptocurrencies if they become eligible for inclusion in the index. Hashdex notes that should such an expansion occur, it would shift to a sample replication strategy, maintaining Bitcoin and Ether in the proportions dictated by the index.
Following the S-1 registration, Hashdex had previously submitted a 19b-4 form on June 18, which received acknowledgment from U.S. securities regulators later that month. The approval of both the S-1 and 19b-4 forms would allow the ETF to officially list and trade, potentially making it the first combined cryptocurrency ETF in the U.S.
Weighting and Index Composition
If approved, the ETF’s weighting would reflect the relative free float market caps of the included cryptocurrencies. As of the latest data, this would result in a composition of 76.3% Bitcoin and 23.7% Ether. Other cryptocurrencies like Litecoin (LTC), Chainlink (LINK), Uniswap (UNI), and Filecoin (FIL), which are part of the Nasdaq Crypto US Settlement Price Index, could also be considered for future inclusion.
For the secure management of its assets, Hashdex has arranged for BitGo and Coinbase Custody to serve as custodians. These firms will hold the BTC and ETH assets in segregated accounts, which are designated for individual shareholders, ensuring enhanced security and compliance.
Market Context and Competitor Activity
The filing of Hashdex’s ETF comes amidst a flurry of activity in the cryptocurrency ETF space. Notably, just two days prior to Hashdex’s S-1 submission, eight asset managers launched their spot Ether ETFs on U.S. stock exchanges. These new ETFs attracted a significant $590.7 million in combined inflows on their first trading day, surpassing initial expectations and highlighting robust investor demand for cryptocurrency-based investment products.
The approval and successful launch of Hashdex’s ETF could have profound implications for the cryptocurrency market, potentially enhancing liquidity, providing more stable investment avenues for institutional and retail investors, and fostering broader acceptance of cryptocurrencies as legitimate financial assets.
As Hashdex navigates the regulatory landscape to bring its innovative ETF to market, the crypto and financial sectors keenly anticipate the potential impact of such a product. This ETF not only represents a significant milestone for Hashdex but also for the broader acceptance and integration of cryptocurrencies into mainstream financial systems.
