SEC approves Crypto Index ETFs from Franklin Templeton and Hashdex

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As a seasoned crypto investor with a decade of experience navigating this ever-evolving digital frontier, I can’t help but feel a sense of validation and anticipation upon hearing the news about the SEC’s approval of spot cryptocurrency index ETFs.

The U.S. Securities and Exchange Commission has given the green light to two cryptocurrency index ETFs that can be traded directly on the market.

On December 18th, the SEC gave its approval for Franklin Templeton’s proposal for a cryptocurrency index ETF, enabling it to be traded on the Cboe BZX Exchange. The following day, the commission endorsed Hashdex’s crypto index ETF, which will trade on the Nasdaq stock market.

The updated proposal by Franklin Templeton was given “expedited approval” as their new filing fulfilled all essential conditions and was found to be very much alike to previously sanctioned Bitcoin and Ether trading-based exchange-traded funds (ETPs).

Investing in a Cryptocurrency Index ETF allows you to follow the overall performance of several different cryptocurrencies. By doing so, you gain a diversified stake in the digital currency market via a single investment tool. This type of ETF mirrors the performance of a base index by owning comparable assets in roughly the same weights.

As a researcher, I’d express it like this: “I’m focusing my study on two distinct cryptocurrency exchange-traded funds (ETFs). The Hashdex Crypto Index ETF follows the Nasdaq Crypto US Settlement Price Index, which predominantly concentrates on spot Bitcoin and Ether. On the other hand, Franklin Templeton’s product mirrors the performance of the Institutional Digital Asset Index, also focusing primarily on these two leading cryptocurrencies in their spot market.

In August, Franklin Templeton made its application for the Franklin Crypto Index ETF, whereas Hashdex first filed their S-1 form in June. Later, they updated their original application on November 25. (Paraphrased for clarity and simplicity)

Previously, the SEC requested an extension to carefully review both proposals. Hashdex and Franklin Templeton alleviated these concerns by submitting updated applications, which the commission, in its December 19th announcement, confirmed adhered to regulatory standards aimed at preventing fraudulent activities, safeguarding investors, and maintaining market honesty.

As per Bloomberg analyst Eric Balchunas’ predictions, these funds are expected to start operating in January. It is anticipated that around 80% of their investments will be in Bitcoin, while approximately 20% will be allocated to Ether.

As the initial crypto index funds receive approval, experts such as Nate Geraci, President of ETF Store, predict that more providers will introduce similar offerings, due to a growing demand for these types of investment products among financial advisors who are looking to diversify their portfolios.

Over the past month, I’ve been eagerly following the news about Bitwise’s proposal to the SEC. They’re planning to introduce a Spot Bitcoin and Ether ETP on the NYSE Arca. As an investor in the crypto space, this sounds like exciting news! The fund aims to offer a convenient way for us to diversify our holdings with balanced exposure to the two largest digital assets, as per their statement on November 26th.

These advancements occur concurrently with impending management transitions at the SEC, as Chairman Gary Gensler has declared his departure, which will become effective on January 20, 2025, the same day President-elect Donald Trump is scheduled to assume office.

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2024-12-20 10:20