The race to launch the first approved cryptocurrency Exchange-Traded Fund (ETF) is heating up, with the Nasdaq stock exchange submitting an application to the Securities and Exchange Commission (SEC) seeking approval to list an Ethereum ETF. This proposed ETF is no ordinary one; it’s a brainchild of Hashdex, an asset management company, and adopts a fresh approach to cryptocurrency investment within the regulatory framework. Particularly noteworthy is the fact that it intends to incorporate both spot ether holdings and futures contracts in its portfolio.
Known as the Hashdex Nasdaq Ethereum ETF, this investment is the first filing for futures and spot Ether holdings under the ’33 Act. Toroso Investments undertakes its oversight and supervision. As the key operator behind the ETF, Toroso Investments is registered as a commodity pool operator with the Commodity Futures Trading Commission (CFTC) and also a member of the National Futures Association.
In light of the recent surge in cryptocurrency ETF applications, it’s interesting to see how fund managers are creatively bridging the gap between the approved futures contracts and the yet-to-be-approved spot assets. Fundamentally, Hashdex’s fund aims to ensure that its shares mirror the daily fluctuations in the Nasdaq Ether Reference Price. The method of achieving this is by strategically applying its assets to investments in ether, ether futures contracts traded on the CME, and cash and cash equivalents.
Hashdex’s approach has particular significance in light of the market’s ongoing apprehensions about price manipulation in the spot market. By not just relying on spot Ether but also incorporating Ether Futures Contracts and cash, the fund intends to reduce its dependence on the spot market, thereby alleviating concerns about potential manipulation in unregulated Ether spot exchanges.
As Hashdex throws its hat in the ring for a spot BTC exchange-traded fund in the United States, it noticeably deviates from recent filings by not depending on the Coinbase surveillance sharing agreement. Instead, it seeks to acquire spot Bitcoin from physical exchanges within the CME market, thereby adding another layer of intrigue to the unfolding Ethereum ETF story.
Despite the enthusiasm and innovative approaches surrounding cryptocurrency ETF applications, the SEC has yet to approve any application for spot cryptocurrency funds. Thereby, hanging the determining pendulum over the fate of funds like Hashdex’s. As the push for a transparent, regulated pathway to cryptocurrency investment continues, all eyes are on the SEC for indications that could shape the future of crypto trading.
Source: Cointelegraph
