Traditional financial institutions who have submitted crypto ETF applications have focused on a particular market (spot or futures). However, a recent one NASDAQ application suggests asset manager Hashdex is taking a different approach, which could be a gamechanger in the Ethereum ETF race.
NASDAQ proposes to list Ethereum ETF
According to the application submitted to the U.S. Securities and Exchange Commission (SEC), the exchange plans to sell shares of the Hashdex Nasdaq Ethereum ETF, which will be managed and controlled by Toroso Investments LLC.
Interestingly, the fund will hold both Ether futures contracts and Spot Ether. This move by asset manager Hashdex is new, given that other asset managers have signed up to one Spot Ether ETF or Ether Futures ETF or applied to offer both separately. However, Hashdex wants to offer a fund with both Ether futures contracts and a Spot Ethereum ETF.
The fund’s sponsors believe that combining Ether Futures Contracts and Spot Ether will help limit the risk of market manipulation (a major concern of the SEC) and provide the market with a “regulated product” that tracks the price of Ethereum . This fund will help US investors gain exposure to Spot Ether without having to rely on “unregulated products, offshore regulated products or indirect strategies such as investing in publicly traded companies that hold Ether.”
In fulfillment of the requirement of having a surveillance-sharing agreement (SSA) for the proposed ETF, Nasdaq stated in the filing that the Chicago Mercantile Exchange (CME) will be used to track the price of Ethereum as the CME is a “represents the regulated market”. of considerable size.”
In addition, the fund is expected to hold physical ether. However, the sponsors do not plan to purchase these tokens from “unregulated etherspot exchanges,” but from the CME Market’s Exchange for Physical (EFP) transactions.
This move is similar to Hashdex application to combine a spot Bitcoin ETF with its existing Bitcoin futures ETF. Hashdex stated in its filing that the CME will be used to track the price of Spot Bitcoin and that all Bitcoin purchases will come from the CME’s EFP.
ETH kicks off Wednesday on a volatile note | Source: ETHUSD on Tradingview.com
Hashdex throws other asset managers under the bus?
Nasdaq’s application mentions the phrase “unregulated spot exchanges” several times in what appears to be a direct attack on Coin base and the applications of other asset managers. It’s worth mentioning some of the other asset managers including Ark Investwho applied to offer an Ethereum-related ETF have chosen Coinbase as their custodian.
As such, it does not seem appropriate for Hashdex to label Coinbase as an “unregulated spot exchange” as this could undoubtedly influence the SEC’s decision in considering these applications.
Furthermore, asset managers like BlackRock, who chose Coinbase as their SSA and custodian, had already stirred controversy as many had stated that the SEC would not be as inclined to approve a filing that directly or indirectly involves Coinbase because they have a ongoing lawsuit against the crypto exchange.
Although many may praise this Hashdex’s “innovative approach”, we should be wary of how this approach could hinder the adoption of others and its ultimate effect on the crypto industry at large.
Featured image from iStock, chart from Tradingview.com