Nasdaq Seeks Approval for Innovative Ethereum ETF by Hashdex

The Nasdaq has applied to the Securities and Exchange Commission (SEC) for approval to list an Ethereum exchange-traded fund (ETF) offered by Hashdex, an asset manager.

This ETF’s portfolio will consist of a combination of spot ether holdings and futures contracts, pioneering a novel approach to investing in cryptocurrencies within the regulatory framework.

This investment fund, known as the Hashdex Nasdaq Ethereum ETF, is the first filing of futures on Ethereum under the ’33 Act and is managed and supervised by Toroso Investments.

Toroso Investments is registered with the Commodity Futures Trading Commission (CFTC) as a commodity pool operator and is also a member of the National Futures Association.

Significant emphasis has been placed on whether the proposed cryptocurrency ETFs will hold futures contracts or spot assets in light of the recent influx of ETF applications. While the SEC has authorized the former, it has not approved the latter.

Fund managers appear to be evaluating the viability of a middle-ground option in this regulatory environment. Hashdex’s primary investment objective is to ensure that its shares track the daily fluctuations of the Nasdaq Ether Reference Price.

To accomplish this goal, the fund intends to invest in ether, CME-traded ether futures contracts, currency, and cash equivalents. The Fund intends to reduce its reliance on the spot market and resolve concerns about potential manipulation in unregulated ether spot exchanges by holding ether futures contracts and cash, according to Nasdaq’s 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,”

Hashdex entered the race for a Bitcoin spot exchange-traded fund in the United States. Hashdex’s strategy differs from recent filings in that it will not rely on the Coinbase surveillance sharing agreement and will instead acquire Bitcoin spot from tangible exchanges within the CME market.

In the previous week, Ark Invest and 21Shares both submitted SEC applications for spot ether ETFs, a type of ETF that VanEck is also pursuing. To date, the SEC has postponed decisions on all applications it has received for spot cryptocurrency funds.