US SEC Approves Crypto ETFs: Franklin and Hashdex Bring Bitcoin and Ethereum to Nasdaq

• On Thursday, the Securities and Exchange Commission approved the Hashdex Nasdaq Crypto Index US ETF and the Franklin Templeton Crypto Index ETF for trading in the public market.
• Hashdex’s Crypto Index ETF will track the Nasdaq Crypto US Settlement Price Index, while Franklin Templeton’s ETF will mirror the Institutional Digital Asset Index.

The US Securities and Exchange Commission (SEC) has approved combined spot-based Bitcoin and Ethereum exchange-traded Funds (ETF) from Franklin Templeton, a global asset manager, and Hashdex. According to the report released, the approval allows Franklin Templeton to trade on the Cboe BZX Exchange while Hashdex will trade on the Nasdaq stock market. Nasdaq submitted an updated proposal for the Hashdex crypto index ETF in September, following its initial filing in May. Meanwhile, Franklin Templeton has been working towards this ETF since it filed its proposal in August.

The filing notes that the proportions of Bitcoin (BTC) and Ethereum (ETH) held by each Trust will be determined based on free-float market capitalizations, allowing adjustments according to these cryptocurrencies’ liquidity and trading availability. Franklin Templeton’s crypto index ETF has received “accelerated approval” from the SEC, aligning it with previously approved spot exchange-traded products (ETPs) that show strong correlations with CME futures, indicating their market viability.

The SEC emphasized the importance of a surveillance-sharing agreement, which enables exchanges to share trading data and market information to combat fraud and manipulation. The Bitcoin-Ethereum ETF adheres to established standards for commodity-based investments and operates within a significant regulated market. This approval indicates the SEC’s acceptance of diversified crypto ETFs, provided they meet regulatory standards and correlate well with traditional markets. 

Implications for the Crypto Market

According to Bloomberg analyst Eric Balchunas, the funds are “likely” to go live in January, with Bitcoin making up about 80% and Ether 20% of the holdings. Moreover, the approval validates the speculations made by Balchunas on Tuesday regarding a new wave of ETFs. He anticipated that Bitcoin and Ethereum ETFs would be approved first, followed by Litecoin (LTC) and HBAR ETFs.

Now that the first crypto index funds have been approved, experts such as Nate Geraci, President of ETF Store, expect that more issuers like BlackRock will jump on the bandwagon. He predicts a “significant demand” for these products as advisors look for ways to diversify. In contrast, other digital assets, including Solana and XRP, are under heightened regulatory scrutiny. Overall, the SEC’s endorsement of these ETFs reflects a careful yet progressive approach to cryptocurrency regulation.

The SEC’s decision comes amid significant volatility in the cryptocurrency markets. 

According to CoinGlass data, over $1 billion worth of cryptocurrency was liquidated in the last 24 hours. Additionally, Bitcoin and Ethereum’s prices have dropped sharply, trading slightly above $93,000 and $3,200, respectively. Nonetheless, experts believe the introduction of these ETFs could help stabilize the market and attract more institutional investors.