SEC Approves Franklin Templeton and Hashdex’s Combined Bitcoin and Ethereum Crypto Index ETFs

Highlights:

• SEC approved dual Bitcoin and Ethereum ETFs from Hashdex and Franklin Templeton.
• The ETFs will be listed on the Cboe BZX and Nasdaq exchanges, offering regulated exposure.
• Analysts predict more crypto ETFs in 2025 due to leadership changes.
  

On Dec. 19, the United States Securities and Exchange Commission (SEC) approved dual Bitcoin and Ethereum exchange-traded funds (ETFs) from Hashdex and Franklin Templeton. This approval is a major milestone for the crypto market, offering investors regulated exposure to Bitcoin and Ethereum through ETFs.

The approvals cover the Franklin Templeton Crypto Index ETF and Hashdex Nasdaq Crypto Index US ETF. These funds will be listed on the Cboe BZX Exchange and Nasdaq, respectively. The two ETFs will, as part of their structure, own Ethereum, Bitcoin, cash, and cash equivalents. 

The U.S. SEC has approved proposed rule changes by Nasdaq and Cboe BZX to list and trade the Hashdex Nasdaq Crypto Index US ETF and the Franklin Crypto Index ETF, respectively. The approval includes accelerated processing for the Franklin ETF. Both ETFs will offer exposure to…

— Wu Blockchain (@WuBlockchain) December 19, 2024

In August, Franklin Templeton submitted a request to the SEC for approval of its crypto index ETF. However, the regulatory agency delayed the decision on Nov. 20. The SEC said Franklin Templeton submitted an updated filing on Dec. 18. This filing received accelerated clearance due to compliance with existing standards for commodity-based trust shares. 

Hashdex filed for its ETF in June. The asset manager Hashdex submitted its second amended ETF application on Nov. 25, following the first amended S-1 filed in October.

Commission Approves Proposals Meeting Exchange Act Criteria

The commission stated that the proposals met Exchange Act criteria. These criteria require issuers to have rules preventing fraud and manipulation. They also aim to protect investors and serve the public interest. Analysts believe leadership changes in Washington may have sped up the approvals. 

The regulatory approval comes amid major market turbulence. According to CoinGlass, over $1 billion in crypto liquidations occurred within 24 hours. During this time, Bitcoin fell by more than 7%, dropping from yesterday’s high of $105,000 to below $96,000.

Nate Geraci, president of The ETF Store, speculated about the SEC’s approval in a Dec. 19 post on X. He suggested that the approval might inspire other firms to follow suit. He questioned if companies like BlackRock might launch similar ETFs. “Regardless, I expect there will be meaningful demand for these products. Advisers LOVE diversification. Especially in an emerging asset class such as crypto,” Geraci added.

Analysts Expect a Wave of Crypto ETFs Next Year

Bloomberg analysts Eric Balchunas and James Seyffart predict several new crypto ETFs will launch next year following anticipated changes in US SEC leadership under President-elect Donald Trump’s administration.

We expect a wave of cryptocurrency ETFs next year, albeit not all at once. First out is likely the btc + eth combo ETFs, then prob Litecoin (bc its fork of btc = commodity), then HBAR (bc not labeled security) and then XRP/Solana (which have been labeled securities in pending… pic.twitter.com/29vMdciZxE

— Eric Balchunas (@EricBalchunas) December 17, 2024

They believe that Bitcoin-Ethereum combination products will be the first to launch. Litecoin and Hedera Hashgraph could follow shortly after. However, they noted that ETFs linked to Solana and XRP might face regulatory challenges, leading to potential delays and uncertainty. “Dual bitcoin and ethereum ETFs from Hashdex, Franklin [Templeton] and Bitwise will likely be the next spot crypto ETFs approved,” Seyffart wrote.

Balchunas emphasized Litecoin’s strong position, citing Seyffart’s research. Litecoin’s ties to Bitcoin could help it benefit from a commodity classification. This is similar to how the SEC treats Bitcoin. HBAR has not been classified as a security, which gives it an advantage over tokens facing regulatory scrutiny.

Trump nominated Paul Atkins, a former SEC commissioner supportive of crypto, to replace Gensler. Atkins aims to implement a more relaxed regulatory approach. This could simplify the approval process for crypto ETFs.