Nasdaq’s asset manager, Hashdex, has applied to the Securities and Exchange Commission (SEC) for approval to list a mixed Ethereum Exchange-Traded Fund (ETF) combining spot ether holdings and futures contracts.
The Hashdex Nasdaq Ethereum ETF investment fund is the first filing of futures Ethereum under the ’33 Act and is managed 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.
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 it. Fund managers are 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. Nasdaq stated on form 19b-4:
“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,”
According to the Fund’s white paper, Ether Futures Contracts and currency will be added to the Fund’s holdings to reduce its reliance on the spot market and alleviate concerns about potential manipulation on unregulated Ether spot exchanges.
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 but will 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. The SEC has postponed decisions on all applications it has received for spot cryptocurrency funds.
