The SEC has officially approved two Bitcoin and Ether spot ETFs from Hashdex and Franklin Templeton, paving the way for new capital inflows into the cryptocurrency market.
The U.S. Securities and Exchange Commission (SEC) has officially approved two Bitcoin and Ether spot ETFs (Exchange Traded Funds), marking a significant step in the legalization and institutionalization of the cryptocurrency market. This decision was announced on December 19, allowing Hashdex's Nasdaq Crypto Index US ETF to be listed on Nasdaq and Franklin Crypto Index ETF to trade on the Cboe BZX Exchange.
Both of these ETFs focus on holding Bitcoin and Ether in the form of spot trading, unlike the derivative products that have been approved previously. The Franklin Crypto Index ETF will track the Institutional Digital Asset Index, reflecting the performance of top digital assets such as Bitcoin and Ether.
Meanwhile, Hashdex's Nasdaq Crypto Index US ETF will be based on the Nasdaq Crypto US Settlement Price Index, which also includes these two cryptocurrencies.
Impact on the Market
The SEC's approval of these two ETFs came through a "fast-track" process after Franklin Templeton updated its filing on December 18. The SEC stated that the decision was based on the revised structure of the Trusts and the operating terms of the two companies, similar to the previously approved proposals for spot Bitcoin (Spot Bitcoin ETP) and Ether (Spot Ether ETP) ETFs.
The agency confirmed that the proposals met the criteria of the Exchange Act, including preventing fraud, market manipulation, and protecting investors as well as the public interest.
This event is expected to open the door for new capital inflows from institutional investors into the cryptocurrency market. Nate Geraci, the President of The ETF Store, an investment advisory firm specializing in ETFs, believes the SEC's approval could set a precedent for other companies to enter the market. He suggests that these products will attract significant demand, particularly from financial advisors who are always seeking investment portfolio diversification, especially in an emerging asset class like cryptocurrencies.
Previously, Franklin Templeton had filed for a cryptocurrency index ETF in August, but the SEC's decision was delayed until November 20. Hashdex also submitted a second amended filing on November 25 after the SEC requested additional time to review the initial proposal from October.
The emergence of these two Bitcoin and Ether spot ETFs is not the only effort to bring cryptocurrency investment products to the mainstream U.S. exchanges. The NYSE Arca exchange has filed a request to list Bitwise's ETF, which includes both Bitcoin and Ether, on November 26.
Earlier, in October, NYSE Arca also expressed its intention to list Grayscale's cryptocurrency index ETF, with a diversified portfolio of digital assets. The U.S. regulators are currently reviewing this proposal and are expected to make a decision in the near future.
