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- A recent NASDAQ application indicates that asset manager Hashdex is adopting a different approach in the Ethereum
ETF race, potentially becoming a game-changer in the Ethereum ETF competition.
- The sponsors of the fund believe that combining Ether Futures Contracts and Spot Ether and offering a “regulated product” tracking the Ethereum price to the market will be beneficial.
- In NASDAQ’s application, the phrase “unregulated spot exchanges” appears several times, seemingly like a direct attack on Coinbase and other asset managers’ applications.
NASDAQ’s recent SEC application reveals its intention to list and trade Hashdex Nasdaq Ethereum ETF shares, and the exchange does not include Coinbase in the application.
NASDAQ and Hashdex Take Action for Ethereum ETF
Traditional financial institutions have focused on specific markets (spot or futures) for their crypto ETF applications. However, a recent NASDAQ application indicates that asset manager Hashdex is adopting a different approach in the Ethereum ETF race, which could be a game-changer.
According to the application filed with the U.S. Securities and Exchange Commission (SEC), the exchange plans to list and trade shares of Hashdex Nasdaq Ethereum ETF. This fund will be managed and controlled by Toroso Investments LLC.
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Interestingly, this fund will hold both Ether futures contracts and Spot Ether. Hashdex’s move as an asset manager presents a new approach, especially considering other asset managers have applied either for a Spot Ether ETF or an Ether futures ETF or both separately. However, Hashdex aims to provide a fund that holds both Ether futures contracts and Spot Ethereum ETF.
The sponsors of the fund believe that combining Ether Futures Contracts and Spot Ether (to reduce market manipulation risk, a major concern for the SEC) and offering a “regulated product” tracking the Ethereum price will be beneficial. This fund will help U.S. investors gain exposure to Spot Ether without relying on indirect strategies like “unregulated products, products regulated overseas, or public companies holding Ether.”
Due to the requirement for a Surveillance Sharing Agreement (SSA) for the proposed ETF, NASDAQ’s application stated that the Chicago Mercantile Exchange (CME) would be used to track Ethereum’s price since CME represents a “significant regulated market.”
Additionally, it is expected that the fund will physically hold Ether. However, sponsors intend to purchase these tokens not from “unregulated Ethereum spot exchanges” but through purchases from CME Market’s Exchange for Physicals (EFP) transactions.
This move is similar to Hashdex’s proposal in its previous Bitcoin futures ETF application, where it suggested that CME would be used to track the price of Spot Bitcoin, and all Bitcoin purchases would be made through CME’s EFP.
Does Hashdex Put Other Asset Managers in a Tough Spot?
NASDAQ’s application mentions “unregulated spot exchanges” several times, seemingly as a direct attack on Coinbase and other asset managers’ applications. It’s important to note that other asset managers, including Ark Invest, have selected Coinbase as the custodian for their Ethereum ETF proposals.
Therefore, Hashdex labeling Coinbase as an “unregulated spot exchange” does not seem accurate, as this could potentially influence the SEC’s decision when dealing with these applications.
Moreover, asset managers like BlackRock choosing Coinbase as an SSA and custodian prompted many to speculate that the SEC might be less inclined to approve an application directly or indirectly associated with this crypto exchange due to its ongoing legal dispute with the company.
While many may appreciate Hashdex’s “innovative approach,” it’s essential to monitor how this approach might affect other applications and the broader crypto industry.