- SEC approves spot Bitcoin and Ethereum ETFs, marking a key development for crypto investment.
- Hashdex and Franklin Templeton’s ETFs offer market-cap weighted exposure to Bitcoin and Ether.
- The SEC’s approval highlights growing confidence in regulated crypto investment products.
The U.S. SEC approved two spot bitcoin and ethereum exchange-traded funds (ETFs) on December 19. The approval followed several months of consideration and review. The two products are Hashdex’s Nasdaq Crypto Index US ETF and Franklin Templeton’s Franklin Crypto Index ETF. These will enable Bitcoin and Ether trading on major stock exchanges. Both the funds will be effective from January next year 2024.
Details of the Approved ETFs
The Hashdex Crypto Index US ETF will list on the Nasdaq stock exchange. Franklin’s Crypto Index ETF will also be traded under the symbol FDLV and will follow the Institutional Digital Asset Index. Both the ETFs will similarly hold Bitcoin and Ether and will be based on market capitalization. Approximately 80% would be invested in Bitcoin and 20% in Ether. This market-cap structure is expected to make both funds attractive to investors.
The SEC’s approval followed the amended filings by both companies. These filings satisfied the SEC rules of fraud and manipulation of the market. The SEC also determined that Bitcoin and Ether’s current spot markets are highly correlated to their respective CME futures markets. This connection gives confidence that surveillance agreements can help identify any fraudulent activity.
SEC’s Confidence in the Crypto Market
The SEC’s decision highlights its growing comfort with the cryptocurrency market. It approved the ETFs after careful analysis of the spot markets for Bitcoin and Ether. The SEC noted that the spot Bitcoin market aligns with the CME Bitcoin futures market. Similarly, the spot Ether market correlates closely with the CME Ether futures market. These factors played a role in the SEC’s approval of the two ETFs.
The agency also emphasized that both funds met the requirements of the Exchange Act. These regulations aim to protect investors and prevent fraudulent activity. The SEC’s approval signals its support for expanding digital asset products within a regulated financial environment.
Hashdex Plans for Future Diversification
Hashdex has plans to expand its ETF holdings in the future. The firm will focus on Bitcoin and Ether initially. However, it plans to add other major digital assets, like Solana and Cardano. Hashdex is optimistic that it will minimize fluctuations in prices or demand and attract more investors. A multi-asset ETF strategy could be interesting for investors with conservative attitudes and those who seek enhanced risks.
The approval of these ETFs also has an implication to the broader market of cryptocurrencies. Conventional investors are able to buy Bitcoins and Ethereum with a regulated financial asset. This can bring about the possibility of attracting more institutional investors into the crypto market. This marks a significant step towards the adoption of digital assets as a part of a financial system.
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