After several extended reviews since June this year, the Securities and Exchange Commission (SEC) has finally approved the first spot exchange-traded funds combining Bitcoin and Ethereum.
The agency has authorized Nasdaq to list the Hashdex Nasdaq Crypto Index US ETF and the Cboe BZX Exchange to list the Franklin Crypto Index ETF, according to a filing released Thursday.
“The proportion of bitcoin and ether to be held by each Trust will be based on free-float market capitalizations,” the filing reads.
Senior Bloomberg ETF analyst Eric Balchunas expects the funds to launch in January with an approximate 80% Bitcoin and 20% Ethereum split, reflecting current market capitalizations.
The funds must comply with continued listing requirements and maintain transparency around portfolio holdings and pricing. Both exchanges will monitor compliance and can initiate delisting procedures if requirements aren’t met.
Trading in the ETF shares will be subject to existing equity securities rules on both exchanges. The funds will disseminate intraday indicative values every 15 seconds during regular trading hours.
The approval comes as significant activity in existing crypto ETF markets continues, with current Bitcoin products showing BlackRock’s IBIT dominating with $56 billion in assets under management (AUM), with over $4.4 billion in volume.
BlackRock’s ETF is followed by Fidelity (FBTC) and Grayscale (GBTC), both of which stand closely with about $20 billion in AUM apiece.
Current data from Coinglass reveals substantial outflows across major funds on December 19, with net negative movements of roughly $671 million.
Getting comfortable
In August, the SEC said that a longer period for review was required for Wednesday’s ETFs to provide “sufficient time to consider the proposed rule change and the issues raised therein.”
Franklin Templeton’s filing received “accelerated approval” based on its similarity to previously approved spot crypto exchange-traded products (ETPs). The SEC also noted that it has continued to show high market correlations with CME futures.
One of the main factors that the SEC considered for this filing is on surveillance-sharing. This setup is an agreement between exchanges to share trading data and essential market information to help detect and prevent fraud and manipulation across connected markets.
The hybrid Bitcoin-Ethereum ETF has demonstrated this with “a regulated market of significant size,” the SEC said, explaining how this new financial product aligns with established commodity-based trust standards.
The approval hints that the SEC is comfortable with a dual-asset framework as long as it fits their standards and correlates enough with established markets. Previously, spot crypto ETFs were limited to single-asset exposure.
“Advisors love diversification, especially in an emerging asset class such as crypto,” said Nate Geraci, president of the ETF Store, discussing the approval in a thread on X. “I expect there will be meaningful demand for these products.”
Geraci also noted that it would be “interesting” to see if other crypto ETF issuers would follow suit and launch similar products.
The SEC did not immediately return a request for comment.
Edited by Sebastian Sinclair
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