The approval of two spot cryptocurrency index exchange-traded funds by the United States Securities and Exchange Commission marks a significant milestone in the digital asset market.
On Dec. 18, the SEC gave the green light to Franklin Templeton’s crypto index ETF proposal, allowing it to be traded on the Cboe BZX Exchange. The following day, the commission also approved Hashdex’s crypto index ETF, which is slated to trade on the Nasdaq stock market.
Franklin Templeton’s proposal received “accelerated approval” after meeting the necessary requirements and being deemed “substantially similar” to previously approved spot Bitcoin and Ether exchange-traded products.
Crypto index ETFs offer investors diversified exposure to the digital asset market through a single investment vehicle. These funds track the performance of multiple cryptocurrencies by holding the same assets in similar proportions to replicate the performance of an underlying index.
Hashdex’s Crypto Index ETF will track the Nasdaq Crypto US Settlement Price Index, while Franklin Templeton’s product will mimic the performance of the Institutional Digital Asset Index, focusing primarily on spot Bitcoin and Ether.
Both companies submitted their filings for the ETFs earlier in the year, with Franklin Templeton submitting in August and Hashdex initially filing in June and later amending its application in November.
The SEC had requested additional time to evaluate both proposals, citing the need for a thorough assessment. However, after submitting revised filings that addressed these concerns, the commission deemed the applications consistent with regulatory requirements aimed at preventing fraud and manipulation, protecting investors, and ensuring market integrity.
Bloomberg analyst Eric Balchunas predicts that the funds will likely go live in January, with Bitcoin comprising approximately 80% of the holdings and Ether making up the remaining 20%.
Experts, such as ETF Store President Nate Geraci, anticipate that more issuers will follow suit with similar products, expecting “meaningful demand” as advisors seek diversification opportunities.
In addition to these developments, Bitwise recently filed a proposal with the SEC to launch a spot Bitcoin and Ether ETP on the NYSE Arca. The fund aims to provide investors with balanced exposure to the two largest crypto assets in an accessible format.
These advancements in the digital asset market coincide with upcoming leadership changes at the SEC, as Chair Gary Gensler has announced his resignation, effective January 20, 2025, coinciding with the inauguration of President-elect Donald Trump.