SEC approves first spot Bitcoin and Ethereum combo ETFs from Hashdex and Franklin Templeton
2024-12-20
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The U.S. Securities and Exchange Commission has approved filings from the Nasdaq and Cboe BZX Exchange to list and trade shares of crypto index exchange-traded funds from Hashdex and Franklin Templeton, respectively.
Both the Hashdex Nasdaq Crypto Index US ETF and Franklin Crypto Index ETF will initially hold spot bitcoin and spot ether based on their respective market capitalizations, so an approximate 80/20 split in bitcoin’s favor, and are likely to launch in January, according to Bloomberg ETF analyst Eric Balchunas. “The spot bitcoin/ether combo ETFs have been approved by the SEC (as predicted),” Balchunas posted to X late Thursday. “Launch likely in January. They’re mkt cap weight so 80/20 btc/eth approx. Notable that Hashdex and Frankie are first. Good for them.”
“Will be interesting to see if BlackRock or others attempt to piggyback on this and launch similar ETFs,” The ETF Store President Nate Geraci noted. “Regardless, I expect there will be meaningful demand for these products. Advisors LOVE diversification. Especially in an emerging asset class such as crypto.”
Geraci also pointed out the SEC’s rationale in Thursday’s approval order, given the similarities to the previously approved spot Bitcoin and Ethereum ETFs in the U.S. "The representations in their respective amended filings are substantially similar to those of the spot bitcoin ETP and spot ether ETP proposals approved in prior Commission orders,” the SEC stated.
First crypto index ETFs to be approved in the US
The Hashdex and Franklin Templeton funds are the first crypto index ETFs to be approved in the U.S. Hashdex initially filed its S-1 registration statement with the SEC in July after Nasdaq filed a 19b-4 form for the fund in June.
The SEC initially postponed its decision on the proposed ETF before Thursday’s approval. Notably, in Hashdex’s amended S-1 filing in November, the asset manager said that based on its assessment, AVAX, LINK and LTC also meet its eligibility criteria and may be included in the future, pending regulatory approval. The Hashdex Nasdaq Crypto Index US ETF will trade under the ticker NCIQ. BitGo, Coinbase, Fidelity and Gemini will be the fund’s core custodians.
Franklin Templeton filed an S-1 for its crypto index ETF in August. The SEC also initially delayed making a decision on the fund in November before approving it yesterday on an accelerated basis. Franklin’s fund would also be able to add further cryptocurrencies should they be given regulatory approval in the future, though the asset manager did not specify any assets in particular. The Franklin Crypto Index ETF will trade under the ticker EZPZ. BitGo and Coinbase will be the fund’s core custodians.
The growing US crypto ETF market
On Jan. 11, the SEC approved proposals for 11 spot bitcoin ETFs on an accelerated basis. ETFs from Ark Invest/21Shares, Bitwise, BlackRock, Fidelity, Franklin Templeton, Grayscale, Invesco, Valkyrie (now CoinShares), VanEck and WisdomTree began trading the next day. An additional spot ETF from Hashdex launched in March after converting from a futures-based ETF, and Grayscale’s mini Bitcoin ETF followed in July.
As the most successful ETF launch in history by many measures, the combined spot Bitcoin funds have since gone on to attract more than $36 billion in net inflows, with around $110 billion in assets under management amid bitcoin’s substantial price rise this year. While the U.S. spot Ethereum ETFs have proven less popular, they have still generated a combined $2.4 billion in total net inflows since trading began in July, with $12 billion in AUM, according to data compiled by The Block.
Franklin’s EZBC spot Bitcoin ETF has generated $461.5 million in total net inflows, while its spot Ethereum product, EZET, has brought in $41.5 million. Hashdex’s spot Bitcoin ETF, DEFI, has attracted $0.7 million in net inflows since its conversion. However, it decided not to move forward with its original proposal for a spot Ethereum ETF.
Speculation has risen in recent months that Solana and XRP may be the next ETF products to be approved in the U.S. under pro-crypto Donald Trump’s incoming administration. However, earlier this week, Bloomberg ETF analyst James Seyffart predicted that Solana and XRP ETFs may arrive after Litecoin and Hedera, given that “the SEC isn't calling Litecoin or HBAR a security anywhere," but added he wasn't sure "whether there's investor demand."
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