Hashdex Applies for “Bitcoin-Ethereum Mixed Physical ETF”

Hashdex, a Brazilian crypto investment firm, has applied to the SEC for a mixed physical ETF holding both Bitcoin and Ethereum.

This ETF, named “Hashdex Nasdaq Crypto Index US ETF,” will use a market cap-weighted system to allocate its assets and aims to track the Nasdaq Crypto US Settlement Price Index.

Learn more about this innovative financial product and its potential impact on the U.S. market.

Adoption of Market Cap-Weighted System

Brazilian cryptocurrency investment firm Hashdex has revealed that it has applied to the U.S. Securities and Exchange Commission (SEC) for a mixed physical ETF (exchange-traded fund) that directly holds both Bitcoin and Ethereum.

This ETF, named the “Hashdex Nasdaq Crypto Index US ETF,” aims to track the performance of the Nasdaq Crypto US Settlement Price Index (NCIUSS).

Specifically, the ETF employs a “market cap-weighted” system to allocate its assets based on their market capitalization as of May 27, 2024. The composition and weighting of the ETF are as follows:

No Investment Beyond Bitcoin and Ethereum

This ETF will not invest in any cryptocurrencies other than BTC and ETH. The application documents explicitly state that it will not invest in crypto securities, tokenized assets, or stablecoins.

Additionally, the ETF will not engage in staking or other income-generating activities related to Ethereum. The custody of the crypto assets will be managed by Coinbase and BitGo.

However, there is a possibility that other cryptocurrencies may be included in the ETF’s portfolio in the future. In such a case, the investment strategy would shift from full replication to sample replication, selecting key elements to hold and determining if regulatory approval is needed.

If cryptocurrencies other than Bitcoin or Ethereum are included or deemed eligible as index components, the sponsor will transition the trust’s investment strategy from full replication to sample replication, holding only Bitcoin and Ethereum at the proportions determined by the index and determining whether a filing with the commission under Section 19b-4 is necessary.

The conditions for cryptocurrencies to be included in the ETF’s portfolio are that they must be listed on a regulated digital asset exchange in the U.S. or be the underlying assets of products listed on a regulated U.S. derivatives platform.

SEC Approval Deadline Around March 2025?

According to Bloomberg ETF analyst James Seyffart, the final deadline for the approval of Hashdex’s mixed ETF is expected to be around the first week of March 2025.

Seyffart noted, “It makes perfect sense for this ETF to be market cap-weighted.” He added that Hashdex already operates a cryptocurrency index ETF in Brazil comprising nine assets, with 90% of the holdings being BTC and ETH.

Thus, bringing a similar product to the U.S. market is a natural progression.

In the U.S., there is growing anticipation for the approval of other cryptocurrency ETFs, including Ethereum physical ETFs, following the approval of Bitcoin physical ETFs.

There is also hope for the emergence of basket-type cryptocurrency ETFs composed of multiple crypto assets.

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