The Nasdaq stock exchange has filed an application with the Securities and Exchange Commission (SEC) to list an Ethereum Exchange-Traded Fund (ETF) offered by Hashdex, an asset management company. This ETF aims to include a combination of spot ether holdings and futures contracts in its portfolio, presenting a novel approach to cryptocurrency investment within regulatory guidelines.
The Hashdex Nasdaq Ethereum ETF, also known as the first ’33 Act Ethereum futures filing of futures Ethereum under the ‘33 Act, is overseen and supervised by Toroso Investments. Toroso Investments is registered as a commodity pool operator with the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association.
The recent surge in cryptocurrency ETF applications has highlighted the focus on whether proposed funds will include futures contracts or spot assets. While the SEC has approved the former, spot assets remain unapproved. Fund managers are exploring a middle-ground option, testing their prospects within this regulatory landscape.
The primary objective of the Hashdex fund is to ensure that its shares reflect the daily fluctuations in the Nasdaq Ether Reference Price. To achieve this goal, the fund plans to allocate its assets to investments in ether, ether futures contracts traded on the CME, and cash equivalents. Nasdaq stated in the 19b-4 form:
“Instead of holding 100% spot Ether, which could make it more susceptible to price manipulation in the spot market, the Fund will hold a mix of Spot Ether, Ether Futures Contracts, and cash,”
The fund aims to reduce its dependence on the spot market and address concerns about potential manipulation in unregulated Ether spot exchanges by including Ether Futures Contracts and cash in its holdings.
Related: Franklin Templeton files for spot Bitcoin ETF
Hashdex has also entered the competition for a spot Bitcoin (BTC) exchange-traded fund in the United States. However, Hashdex’s approach differs as it will not rely on the Coinbase surveillance sharing agreement but instead acquire spot Bitcoin from physical exchanges within the CME market.
Last week, both Ark Invest and 21Shares submitted applications to the SEC for a spot ether ETF, a type of ETF also pursued by VanEck. The SEC has deferred its determinations on all the applications received for spot cryptocurrency funds.
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