SEC Approves Historic Bitcoin and Ethereum ETFs

The US Securities and Exchange Commission (SEC) approved the two first-ever hybrid Bitcoin and Ethereum ETFs from Hashdex and Franklin Templeton this week, broadening institutional access to crypto.

First-Ever Combined ETFs

After extended reviews since June, the SEC approved the first spot exchange-traded funds (ETFs) combining Bitcoin and Ethereum on Thursday, December 19.

The SEC filing confirmed that Hashdex’s Crypto Index US ETF will trade on the Nasdaq exchange, alongside the Franklin Crypto Index ETF, which will be listed on the Cboe BZX exchange.

The Franklin Crypto Index ETF tracks the Institutional Digital Asset Index, which includes digital assets like Bitcoin and Ether. Meanwhile, Hashdex’s Crypto Index ETF incorporates Bitcoin and Ether as part of the Nasdaq Crypto US Settlement Price Index.

The filing stated that the hybrid ETFs are “substantially similar” to previously approved spot-based ETFs, with Bitcoin and Ether allocations determined by their free-float market capitalizations.

Analyst Eric Balchunas speculates that the market cap distribution could be 80% Bitcoin and 20% Ethereum in the hybrid ETFs.

Both ETFs are expected to launch in January 2025.

More Plans on the Horizon

According to Hashdex, its hybrid ETF will initially focus on Bitcoin and Ethereum, with plans to potentially include Solana and Cardano in the future. By diversifying across multiple major digital assets, the firm aims to reduce the volatility often seen in single-asset ETFs.

Hashdex and Franklin Templeton are not the only firms looking to launch a crypto index ETF in the U.S. this year. Earlier this year, securities exchange NYSE Arca requested approval to list both a Grayscale crypto index ETF, which would include various cryptocurrencies and a Bitwise ETF that holds Bitcoin and Ether. US regulators are still reviewing both listings for approval.

The approval of two new hybrid crypto ETFs comes amid strong activity in the crypto ETF market, with BlackRock’s IBIT leading Bitcoin products, boasting $56 billion in assets under management (AUM).

On the Flipside:

• After Bitcoin’s price dropped 7%, hitting a low of $95,500 early Friday, US Bitcoin ETFs saw record withdrawals of nearly $680 million in one day. Fidelity’s FBTC recorded the largest $208.6 million outflow.

Why This Matters

Regulatory changes, including faster approval processes and shifts in SEC leadership, suggest a more favorable landscape for crypto ETFs.

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