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Nasdaq, the well-known stock exchange, has applied to the Securities and Exchange Commission (SEC) requesting permission to list an Ethereum Exchange-Traded Fund (ETF) that is provided by Hashdex, a prominent firm in asset management. This ETF, which represents a profoundly innovative approach within the regulatory context, will include a blend of ether holdings and futures contracts in its portfolio.
Introducing the Hashdex Nasdaq Ethereum ETF
This unique investment fund is called the Hashdex Nasdaq Ethereum ETF. Remarkably, it is the pioneering '33 Act Ethereum futures filing of Ethereum futures under the ‘33 Act. Toroso Investments, a registered commodity pool operator with the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association, both supervises and oversees the fund.
Futures Contracts vs Spot Assets in Crypto ETFs
There is an increased focus on cryptocurrency ETF applications currently. This has led to increased analysis of the choice of funds to include either spot assets or futures contracts. So far, the SEC has approved futures contracts, but spot assets remain untouched. As a result, fund managers are investigating a compromise, examining their opportunities within this regulatory environment.
The Investment Strategy of Hashdex
The primary investment target of the Hashdex fund is to align its shares with the daily variations in the Nasdaq Ether Reference Price. To attain this goal, the fund plans to invest its assets in ether, ether futures contracts that are traded on the CME, as well as cash and monetary equivalents. Nasdaq stated in its 19b-4 form that the fund aims to minimize its dependence on the spot market. It is seeking to address concerns about potential manipulation in unregulated Ether spot exchanges by including Ether Futures Contracts and cash in its holdings.
Hashdex's Different Approach to Bitcoin ETF
Hashdex has made its move into the race for a spot Bitcoin (BTC) exchange-traded fund in the US. However, Hashdex doesn't rely on the Coinbase surveillance sharing agreement like recent filings. Instead, it purchases spot Bitcoin from physical exchanges within the CME market.
Pending Spot Ether ETF Applications
Last week, both Ark Invest and 21Shares asked the SEC for permission to launch a spot ether ETF, a request also made by VanEck. Thus far, the SEC has postponed its decisions regarding all the applications it received for spot cryptocurrency funds.
