The U.S. Securities and Exchange Commission (SEC) has given the green light to combined exchange-traded funds (ETFs) based on Bitcoin (BTC) and Ethereum (ETH), submitted by asset managers Hashdex and Franklin Templeton. This marks a significant milestone in the integration of cryptocurrencies into mainstream financial markets.
A New Era for Crypto ETFs
The Hashdex Nasdaq Crypto Index US ETF and the Franklin Templeton Crypto Index ETF received accelerated approval from the SEC. On December 19, the SEC approved Franklin Templeton’s updated application, which met all regulatory standards for commodity trusts. The commission also endorsed rule changes proposed by Nasdaq and Cboe BZX to facilitate the listing and trading of these funds.
According to game designer Chad Steingraber, “The SEC just approved the Hashdex Crypto Index ETF. Initially, the fund will include only BTC and ETH but will expand over time to other assets… including XRP!”
Market Impact and Future Outlook
Hashdex initially filed for the ETF in June, but the SEC delayed its decision twice due to regulatory discussions. Analysts speculate that upcoming changes in U.S. leadership may have expedited the approval process. Senior ETF analyst at Bloomberg, Eric Balchunas, noted, “The launch will likely happen in January. They are market cap-weighted, roughly 80/20 for BTC/ETH. Notably, Hashdex and Frankie were the first. Kudos to them.”
Despite this positive development, crypto ETFs have recently faced challenges. On December 19, spot Bitcoin ETFs reported their largest daily outflow of $680 million, while Ethereum-based ETFs saw $60 million withdrawn. This negative trend interrupted a two-week streak of inflows. The Fidelity fund suffered the most significant losses, with $208 million pulled out, while BlackRock’s Bitcoin ETF showed no change.
The outflows are likely linked to the recent downturn in the crypto market. Bitcoin’s price dropped nearly 4% over the past 24 hours, while Ethereum fell by more than 7%. Nonetheless, U.S. Bitcoin ETFs still hold more BTC collectively than the enigmatic Bitcoin creator, Satoshi Nakamoto.
Investment Considerations
The SEC’s approval of dual Bitcoin and Ethereum ETFs could pave the way for a broader range of crypto-focused ETFs in the near future. Bloomberg has predicted that 2025 may see a surge in ETFs targeting various cryptocurrencies, with Litecoin ETFs possibly following the dual Bitcoin and Ethereum instruments.
For investors, this development signifies a growing acceptance of cryptocurrencies within regulated financial frameworks. The accessibility and legitimacy provided by ETFs might attract more institutional and retail investors into the crypto space. However, the recent outflows and market volatility serve as a reminder of the inherent risks involved.
Final Thoughts
The SEC’s approval is a landmark event that could accelerate the integration of digital assets into traditional investment portfolios. While this opens new opportunities, investors should remain cautious and conduct thorough research before making any investment decisions.
This article is for informational purposes only and does not constitute financial or investment advice.
