The pile of crypto-related ETF applications on the SEC's desk continues to grow.
In a strategic partnership, the stock exchange Nasdaq and asset management firm Hashdex seek to push the envelope in the cryptocurrency Exchange-Traded Fund (ETF) landscape.
The joint application to the US Securities and Exchange Commission (SEC) outlines plans for an Ethereum-based ETF, aiming to feature both spot Ether and futures contracts.
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Seeking SEC approval, the Hashdex Nasdaq Ethereum ETF is a first-of-its-kind investment vehicle under the ‘33 Act aiming to offer a different take on Ethereum investments.
With regulatory oversight from Toroso Investments, a firm that holds commodity pool operator status with the Commodity Futures Trading Commission (CFTC), the proposed ETF aims for balanced exposure in the Ethereum market.
Unique to the Hashdex ETF, the asset allocation strategy aims to track daily changes in the Nasdaq Ether Reference Price.
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.
This balanced approach is designed to alleviate concerns about potential price manipulation in unregulated spot markets.
The application comes at a time when the SEC has been inundated with cryptocurrency ETF proposals, leaving the commission to ponder the viability of spot versus futures contracts in these offerings. Thus far, the SEC has approved futures-based offerings, while spot-based crypto ETFs have yet to get the regulatory nod.
It is worth noting that ETF providers like Ark Invest and 21Shares, VanEck are waiting for their pending applications for spot Ether ETFs.
The partnership between Nasdaq and Hashdex to file for a unique Ethereum ETF could redefine regulatory norms for cryptocurrency ETFs. By blending spot and futures contracts into a single investment product, this ETF might find the middle ground that satisfies regulatory scrutiny.
