The Nasdaq stock exchange has submitted an application to the Securities and Exchange Commission (SEC) seeking approval to list an Ethereum Exchange-Traded Fund (ETF) offered by Hashdex, an asset management company. This ETF is designed to include a combination of spot ether holdings and futures contracts in its portfolio and pioneering a new approach to cryptocurrency investment within the regulatory framework.
Known as the Hashdex Nasdaq Ethereum ETF, this investment fund is the first ’33 Act Ethereum futures filing of futures Ethereum under the ‘33 Act and is overseen and supervised by Toroso Investments. Toroso Investments is registered as a commodity pool operator with the Commodity Futures Trading Commission (CFTC) and is also a member of the National Futures Association.
The current surge in cryptocurrency ETF applications has placed significant emphasis on whether the proposed funds intend to include futures contracts or spot assets. While the SEC has granted approval for the former, the latter remains unapproved. Fund managers appear to be exploring a middle-ground option, testing their chances in this regulatory landscape.
The primary investment goal of the Hashdex fund is to ensure that its shares mirror the daily fluctuations in the Nasdaq Ether Reference Price. To achieve this objective, the fund intends to allocate its assets to investments in ether, ether futures contracts traded on the CME, as well as cash and cash equivalents. Nasdaq said in the 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,”
The Fund aims to decrease its reliance on the spot market and address worries regarding potential manipulation in unregulated Ether spot exchanges by including Ether Futures Contracts and cash in its holdings, it elaborated.
Hashdex joined the competition for a spot Bitcoin (BTC) exchange-traded fund in the United States. However, Hashdex’s approach differs from recent filings as it won’t depend on the Coinbase surveillance sharing agreement, opting to acquire spot Bitcoin from physical exchanges within the CME market.
In the previous week, both Ark Invest and 21Shares submitted applications to the SEC for a spot ether ETF, a type of ETF also being pursued by VanEck. The SEC has thus far deferred its determinations on all the applications it has received for spot cryptocurrency funds.