Hashdex Withdraws Application for Spot Ether ETF

Hashdex has withdrawn its application for a spot Ether exchange-traded fund (ETF), according to a recent filing with the United States Securities and Exchange Commission (SEC). The notice, dated May 28, revealed that Hashdex retracted its proposal on May 24, shortly after the SEC approved similar products from eight other financial entities.

The Hashdex Nasdaq Ethereum ETF, initially filed in September 2023, aimed to introduce a new investment vehicle combining spot Ether holdings with Ether futures contracts. The reasons for this withdrawal remain unspecified, and it is unclear whether Hashdex plans to resubmit the proposal.

SEC Approvals and Market Impact

The SEC’s approval on May 23 included filings from prominent firms such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. These approvals have paved the way for spot Ether ETFs to be listed and traded, with launches anticipated in June. Unlike Hashdex’s combined spot and futures approach, other applicants focused solely on spot-based Ether ETFs, incorporating amendments to address SEC feedback. These changes often involved removing support for Ether staking to mitigate regulatory concerns.

Hashdex’s proposed ETF stood out by seeking to mirror the Nasdaq Ether Reference Price, aiming to reduce potential market manipulation risks. The fund was designed to hold a mix of spot Ether, Ether futures contracts, and cash, rather than relying solely on spot Ether. This strategy was similar to the company’s approach with its Bitcoin ETF, which did not depend on the Coinbase surveillance sharing agreement. Instead, it sourced spot BTC from physical exchanges within the CME market.

Political and Regulatory Factors

The proposed rule change for the Hashdex Nasdaq Ethereum ETF received attention from lawmakers, with mixed opinions. Democratic Senators Laphonza Butler and Jack Reed expressed concerns about approving spot Ethereum ETFs, while Republican Representatives French Hill, Tom Emmer, and Josh Gottheimer advocated for their approval. As for the other spot Ethereum proposals, issuers must still complete their S-1 registration statements before trading can commence. The SEC has initiated discussions with issuers regarding these forms, though the timeline for completion remains uncertain.

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