Hashdex Files S-1 for First ETF Holding Bitcoin and Ethereum in the US

Hashdex, a renowned crypto asset management firm, has taken a significant step by filing its S-1 registration statement with the U.S. Securities and Exchange Commission for the Hashdex Nasdaq Crypto Index US ETF. This ETF, poised to be the first of its kind in the United States, will track digital assets within the Nasdaq Crypto US Settlement Price Index, predominantly focusing on Bitcoin and Ethereum. As outlined in the S-1 filing, the ETF will initially adopt a sample replication strategy and, if necessary, can incorporate additional cryptocurrencies, such as Litecoin and Chainlink, upon receiving SEC approval. The ETF’s proportions are presently weighted 76.3% in Bitcoin and 23.7% in Ethereum, with custodial responsibilities managed by BitGo and Coinbase Custody. This development emerges in a competitive landscape where other asset managers have recently introduced spot Ether ETFs, highlighting Hashdex’s endeavor to pioneer a diversified, index-based crypto investment vehicle in the U.S. market. Have you ever wondered about the latest developments in cryptocurrency investments, especially those that involve major assets like Bitcoin and Ethereum? If so, you’re in the right place. Hashdex, a crypto asset management firm, has recently filed a registration statement, S-1, with the U.S. Securities and Exchange Commission (SEC) for its Hashdex Nasdaq Crypto Index US ETF. This significant step aims to bring the first index-based crypto ETF to the United States, that will track digital assets included in the Nasdaq Crypto US Settlement Price Index.

Hashdex’s Crypto ETF Awaits SEC Nod

Hashdex’s efforts are pivotal, as they await the SEC’s decision on their S-1 filing. According to the firm’s S-1 filing, should any crypto asset other than Bitcoin and Ethereum become eligible for inclusion in the Index, the Sponsor will shift to a sample replication strategy. This strategy maintains Bitcoin and Ethereum in specified proportions within the Index. However, if the trust decides to revert to a full replication strategy, it must file a rule change under Rule 19b-4 of the Exchange Act with the SEC to modify its listing rules for new Index Constituents.

Further broadening the scope, Bloomberg ETF Analyst James Seyffart indicated in a post on X, formerly known as Twitter, that the fund could add other assets once it earns SEC approval.

Update: @hashdex has filed an S-1 for their Crypto Index ETF. Will start with just #Bitcoin & #Ethereum but can add other assets if and when approved by the SEC. — James Seyffart (@JSeyff) July 24, 2024 (https://twitter.com/JSeyff/status/1816226588499079653?ref_src=twsrc%5Etfw)

The Significance of the S-1 Filing

Hashdex’s S-1 filing, which outlines the security it intends to offer, was submitted approximately five weeks after the company filed its 19b-4 form on June 18. The U.S. securities regulator acknowledged this filing in late June. If both filing steps receive approval, the combined cryptocurrency ETF could officially list and commence trading.

The ETF will be weighted based on the free float market caps of the listed crypto assets, currently set at 76.3% for Bitcoin and 23.7% for Ethereum. Other cryptocurrencies such as Litecoin (LTC), Chainlink (LINK), Uniswap (UNI), and Filecoin (FIL) are also included in the Nasdaq Crypto US Settlement Price Index and might be considered for inclusion in Hashdex’s ETF in the future.

Hashdex’s Filing Excludes ETH Staking

A significant detail in Hashdex’s S-1 filing is the exclusion of Ether staking in its combined spot cryptocurrency ETF. This move becomes noteworthy in light of the recent launch of spot Ether ETFs by eight asset managers on U.S. stock exchanges. BitGo and Coinbase Custody will act as custodians for Hashdex’s Bitcoin and Ethereum assets, which will be kept in segregated accounts for individual shareholders.

This S-1 filing came shortly after multiple asset managers announced the launch of their spot Ether ETFs. On the initial trading day, these ETFs amassed a combined inflow of $590.7 million, surpassing industry analysts’ estimates. However, trends reversed the following day, with significant outflows affecting the market performance of Ethereum—leading to a substantial price decline.

The Ripple Effect on Ethereum

The notable inflows and subsequent outflows following the launch of these Ether ETFs had a discernible impact on Ethereum’s market performance. Despite initial enthusiasm, ETH’s value fell by 10% at one point, dropping below $3,150.

Conclusion

With the filing of the S-1 registration statement, Hashdex is positioning itself as a pioneering force in the U.S. crypto ETF market. Their meticulous planning and strategy reflect an understanding of the growing importance of digital assets in diversified investment portfolios. The exclusion of ETH staking and the potential inclusion of other cryptocurrencies underline a thoughtful approach to managing risk and ensuring regulatory compliance.

The success of this ETF hinges on SEC approval, a milestone that, if achieved, could revolutionize the landscape of cryptocurrency investments in the U.S. through greater accessibility and index-based diversification. The next few months will be pivotal as market watchers, investors, and financial analysts eagerly anticipate the SEC’s decisions on both the S-1 and the 19b-4 filings.

Understanding these developments and their implications is crucial for anyone interested in navigating the rapidly evolving world of cryptocurrency investments. The efforts of firms like Hashdex pave the way for innovative financial products that can cater to the growing demand for diversified, regulated crypto investment opportunities. So, stay informed and prepared as this exciting space continues to unfold.