- Hashdex and Franklin Templeton in a race for U.S. crypto index ETF.
- The appeal of crypto indices lies in their diversification potential.
The interest in crypto index investing appears to be growing, as evidenced by recent filings from potential providers.
On October 1st, Hashdex submitted an amended registration filing (S-1) with the U.S. SEC after the agency requested more time to review its crypto index ETF’s initial application.
Another asset manager, Franklin Templeton, is also looking to launch a similar product that tracks Bitcoin and Ethereum.
It submitted an S-1 registration statement with the regulator in mid-August.
On October 2nd, the SEC received a proposed rule change (19b 4) from the Chicago Board Options Exchange (Cboe) related to the same. Approval from the regulator is required before the index ETF can trade.
In essence, asset managers are aiming to drive more investment in crypto index ETFs.
Unlike single-asset ETFs such as the approved Bitcoin [BTC] and Ethereum [ETH] ETFs, an index ETF offers exposure to multiple assets.
Benefits of Crypto Index Investing
While several multi-coin crypto indices are available, they are currently only accessible to accredited investors in the U.S. For instance, the Bitwise 10 Crypto Index Fund (BITW) tracks 10 different coins, including BTC, ETH, and SOL.
Accredited investors can access these indices through private exchanges and OTC markets.
If approved, the applications from Hashdex and Franklin Templeton would make certain crypto indices available on public exchanges like NYSE or Nasdaq.
It’s worth mentioning that Hashdex already has an approved crypto index ETF in Brazil and aims to replicate this success in the U.S.
The value of crypto indices lies in their diversification strategy, providing investors with exposure to various digital assets without being overly reliant on the performance of a single token.
It’s akin to investing in the S&P 500 index, which tracks a basket of top U.S. stocks rather than individual stock performance.
Julien Vallet, CEO of Netherlands-based crypto firm Finst, noted that 30% of the firm’s retail and institutional investors seek diversification through crypto index ETFs.
In addition to diversification, these indices simplify operations related to liquidity, regulatory compliance, and other complexities associated with digital assets.
Following the approval of spot ETH ETFs in July, Nate Geraci of ETF Store predicted that crypto index ETFs and actively managed crypto ETFs would be the next trend.
His forecast appears to be materializing, further solidifying digital assets as an alternative investment class.