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Nasdaq has expanded its crypto index by including XRP, Solana (SOL), Cardano (ADA), and Stellar Lumens (XLM), enhancing the benchmark’s market representation.
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This update aims to provide a broader and more diversified benchmark for the Hashdex Nasdaq Crypto Index US ETF, reflecting the evolving digital asset landscape.
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According to COINOTAG, “The inclusion of these altcoins marks a significant step towards greater flexibility in U.S.-listed crypto ETFs, pending SEC approval.”
Nasdaq’s addition of XRP, SOL, ADA, and XLM to its crypto index broadens ETF benchmarks, signaling potential diversification pending SEC approval.
Nasdaq’s Strategic Expansion of Crypto Index with XRP, SOL, ADA, and XLM
On June 2, 2024, Nasdaq filed a proposed rule change with the U.S. Securities and Exchange Commission (SEC) to broaden its digital asset benchmark by incorporating four prominent altcoins: XRP, Solana (SOL), Cardano (ADA), and Stellar Lumens (XLM). This move updates the Nasdaq Crypto US Settlement Price Index (NCIUS) to a more comprehensive Nasdaq Crypto Index (NCI), which now includes nine cryptocurrencies, enhancing the index’s market coverage beyond Bitcoin (BTC) and Ethereum (ETH). The expanded index aims to better capture the diversity and dynamics of the crypto market, providing investors with a more representative benchmark for digital assets.
Implications for the Hashdex Nasdaq Crypto Index US ETF and Market Diversification
The proposed change allows the Hashdex Nasdaq Crypto Index US ETF (NCIQ) to track the broader Nasdaq Crypto Index instead of the narrower NCIUS. Currently, due to SEC regulatory constraints, the ETF holds only BTC and ETH, creating a tracking error risk as it attempts to replicate an index with six additional assets. Hashdex employs a sampling strategy to mitigate this mismatch, but full alignment remains unattainable under current rules. Should the SEC approve the proposal by the November 2, 2025 deadline, the ETF would gain the ability to invest directly in all nine cryptocurrencies included in the NCI, potentially reducing tracking errors and enhancing portfolio diversification for U.S. investors.
Regulatory Landscape and Future Outlook for Crypto ETFs
The SEC’s cautious stance on crypto ETFs has historically limited the inclusion of altcoins beyond Bitcoin and Ethereum. Nasdaq’s proposal signals a progressive shift towards accommodating a wider range of digital assets within regulated investment vehicles. Approval of this rule change would represent a pivotal development, enabling ETFs to offer broader exposure to the crypto market while adhering to regulatory standards. This could pave the way for increased institutional participation and improved liquidity across these altcoins, fostering a more mature and accessible crypto investment environment in the United States.
Market Reaction and Industry Perspectives
Industry experts view Nasdaq’s index expansion as a positive indicator of growing acceptance and integration of diverse cryptocurrencies within mainstream financial products. The inclusion of XRP, SOL, ADA, and XLM reflects their rising prominence and utility in the blockchain ecosystem. Market participants anticipate that this diversification will attract a wider investor base seeking exposure to innovative blockchain projects alongside established tokens like BTC and ETH. However, the final impact hinges on regulatory approval and subsequent ETF adjustments, underscoring the importance of ongoing dialogue between market players and regulators.
Conclusion
Nasdaq’s initiative to add XRP, Solana, Cardano, and Stellar Lumens to its crypto index represents a significant advancement in benchmark diversification and ETF flexibility. While current SEC regulations limit the Hashdex ETF’s holdings, potential approval could enable broader crypto asset inclusion, reducing tracking discrepancies and enhancing investor choice. This development underscores the evolving landscape of crypto regulation and market infrastructure, signaling a gradual but meaningful integration of altcoins into regulated investment frameworks. Stakeholders should monitor regulatory updates closely to capitalize on emerging opportunities within the expanding crypto ETF space.
