The U.S. Securities and Exchange Commission (SEC) has made a significant move by approving two spot cryptocurrency index exchange-traded funds (ETFs).
On December 18, the SEC granted approval to Franklin Templeton’s crypto index ETF, which will be traded on the Cboe BZX Exchange. The next day, Hashdex also received approval for its crypto index ETF, set to be listed on the Nasdaq stock market.
Franklin Templeton’s proposal was awarded “accelerated approval,” having met all necessary requirements and demonstrating substantial similarity to previously sanctioned spot Bitcoin and Ether exchange-traded products.
Crypto index ETFs serve to track the performance of multiple cryptocurrencies, providing investors with diversified exposure to the digital asset market through a single investment vehicle. These funds replicate the performance of an underlying index by holding the same assets in similar proportions.
The Hashdex Crypto Index ETF will follow the Nasdaq Crypto US Settlement Price Index, while the Franklin Templeton product will mimic the Institutional Digital Asset Index, both concentrating on spot Bitcoin and Ether investments.
Franklin Templeton initially filed for the Franklin Crypto Index ETF in August. In contrast, Hashdex filed its S-1 in June and submitted an amended application on November 25.
Previously, the SEC had requested additional time to thoroughly evaluate both proposals. Hashdex and Franklin Templeton addressed the SEC’s concerns through revised filings, which were noted on December 19 as compliant with regulatory measures aimed at preventing fraud, protecting investors, and ensuring market integrity.
Industry analysts predict that the funds will be operational by January, with Bitcoin making up approximately 80% and Ether about 20% of the holdings.
Experts anticipate a surge in interest for crypto index funds following this approval, with ETF Store President suggesting that more issuers are expected to enter the market due to strong anticipated demand for diversified investment options.
In related news, Bitwise has filed its proposal with the SEC to introduce a spot Bitcoin and Ether exchange-traded product (ETP) on NYSE Arca. This fund aims to provide investors with balanced exposure to the two largest cryptocurrencies in an easily accessible format.
This transformative landscape in cryptocurrency investing coincides with upcoming changes in SEC leadership, with Chair Gary Gensler set to resign on January 20, 2025.
