The US Securities and Exchange Commission (SEC) has given the green light to two cryptocurrency index exchange-traded funds (ETFs) from Hashdex and Franklin Templeton. These funds, which will be listed on the Nasdaq and Cboe BZX Exchange, will allow investors to buy and sell shares in a portfolio that tracks the performance of Bitcoin and Ethereum. Initially, the funds will hold approximately 80% Bitcoin and 20% Ethereum, based on their market capitalizations.
According to Bloomberg ETF analyst Eric Balchunas, the funds are expected to launch in January. The approval is significant, as it marks the first time the SEC has approved a crypto index ETF in the US. The Hashdex Nasdaq Crypto Index US ETF will trade under the ticker NCIQ, while the Franklin Crypto Index ETF will trade under the ticker EZPZ.
The SEC’s decision is notable, as it comes after the commission had previously delayed making a decision on the proposed ETFs. In its approval order, the SEC stated that the representations made by Hashdex and Franklin Templeton were substantially similar to those made by previous spot Bitcoin and Ethereum ETF proposals that had been approved.
The funds will have core custodians, including BitGo, Coinbase, Fidelity, and Gemini, which will hold the underlying cryptocurrencies. The approval also leaves the door open for the funds to add other cryptocurrencies in the future, pending regulatory approval. For example, Hashdex has already stated that it may include AVAX, LINK, and LTC in its fund, while Franklin Templeton has not specified any particular assets.
The approval is expected to generate significant demand from investors, particularly advisors who are looking to diversify their portfolios. As The ETF Store President Nate Geraci noted, “Advisors LOVE diversification. Especially in an emerging asset class such as crypto.” It will be interesting to see if other companies, such as BlackRock, will follow suit and launch similar ETFs.
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