Nasdaq has formally submitted an application to the US Securities and Exchange Commission (SEC) for approval to list an Ethereum Exchange-Traded Fund (ETF) that combines spot ether holdings and futures contracts. The application, filed on September 11, proposes a novel approach to crypto investment that aligns with regulatory guidelines. The fund, known as the Hashdex Nasdaq Ethereum ETF, will be offered by Brazilian asset management firm Hashdex and managed by Toroso Investments LLC.
The Hashdex Nasdaq Ethereum ETF aims to mirror the daily fluctuations in the Nasdaq Ether Reference Price. It plans to achieve this by diversifying its assets into investments in Ether, Ether futures contracts traded on the CME, and cash equivalents. The fund will hold a mix of Spot Ether, Ether Futures Contracts, and cash to reduce dependence on the spot market and mitigate concerns about potential manipulation in unregulated Ether spot exchanges.
A unique aspect of this application is Hashdex's decision to source spot ether from physical exchanges within the CME market, unlike other Ethereum ETF applications that rely on the Coinbase (NASDAQ:COIN) surveillance sharing agreement. This move seems to be a direct response to other asset managers' applications and could potentially influence the SEC's decisions regarding these applications. Other asset managers like Ark Invest and 21Shares have also submitted separate applications for spot Ether ETFs.
In order to track the price of Ethereum, NASDAQ stated in the application that it would use the Chicago Mercantile Exchange (CME), representing a "regulated market of significant size." The fund sponsors also plan to hold physical Ether but do not intend to purchase these tokens from "unregulated ether spot exchanges," instead opting for the CME Market’s Exchange for Physical (EFP) transactions.
This approach mirrors Hashdex's previous application to combine a spot Bitcoin ETF with its existing Bitcoin futures ETF. In both cases, Hashdex stated that the CME will be used to track Spot Bitcoin’s price and that all Bitcoin purchases will be from the CME’s EFP.
This development comes amid a wave of crypto ETF applications hitting the SEC, with over 15 companies, including WisdomTree, BlackRock (NYSE:BLK), and Fidelity, seeking approval to offer their customers exposure to the crypto industry without direct investment. However, the SEC has deferred decisions on all other applications, keeping the industry in anticipation of their determinations.
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