The SEC has officially approved the two spot Bitcoin and Ether ETFs of Hashdex and Franklin Templeton, paving the way for new capital flows into the cryptocurrency market.
The U.S. Securities and Exchange Commission (SEC) has officially approved two spot Bitcoin and Ether ETF (Exchange Traded Fund) funds, marking a significant step in the legalization and institutionalization of the cryptocurrency market. This decision was announced on December 19, allowing Hashdex's Nasdaq Crypto Index US ETF to be listed on the Nasdaq and the Franklin Crypto Index ETF to trade on the Cboe BZX Exchange.
Both ETFs focus on holding Bitcoin and Ether in spot transactions, unlike previously approved derivative products. The Franklin Crypto Index ETF will track the Institutional Digital Asset Index, reflecting the performance of leading digital assets such as Bitcoin and Ether. Meanwhile, Hashdex's Nasdaq Crypto Index US ETF will be based on the Nasdaq Crypto US Settlement Price Index, which also includes these two cryptocurrencies.
The SEC has approved Hashdex and Franklin Templeton to list and trade shares of cryptocurrency index ETFs. Source: SEC Market Impact
The SEC's approval of the two ETFs occurred through a 'fast-track' mechanism after Franklin Templeton updated its filings on December 18. The SEC stated that the decision was based on modifications to the trusts' structure and operational terms of the two firms, similar to previously approved proposals for spot Bitcoin ETPs and spot Ether ETPs.
The agency affirmed that the proposals meet the criteria of the Securities Exchange Act, including preventing fraud, market manipulation, and protecting investors as well as public interest.
This event is expected to open the door for new capital flows from institutional investors into the cryptocurrency market. Nate Geraci, President of The ETF Store, an investment consulting firm specializing in ETFs, believes that the SEC's approval could set a precedent for other companies to enter the market. He anticipates that these products will attract significant demand, especially from financial advisors who are always looking for portfolio diversification, particularly in an emerging asset class like cryptocurrency.
Earlier, Franklin Templeton submitted an application for approval of its cryptocurrency index ETF in August, but the SEC's decision was delayed until November 20. Hashdex also filed a second amendment on November 25 after the SEC requested additional time to review the initial proposal from October.
The launch of these two spot Bitcoin and Ether ETFs is not the only effort to bring cryptocurrency investment products to mainstream trading in the U.S. The NYSE Arca stock exchange filed a listing request for Bitwise's ETF, which includes both Bitcoin and Ether, on November 26.
Previously, in October, NYSE Arca also expressed its intention to list Grayscale's cryptocurrency index ETF, featuring a diverse portfolio of spot cryptocurrency assets. U.S. regulators are currently reviewing this proposal and are expected to make a decision soon.
