Brazilian asset manager Hashdex has filed with the US Securities and Exchange Commission (SEC) to offer an Ethereum exchange-traded fund (ETF) comprising futures and spot Ether contracts.
Known as the Hasdex Nasdaq Ethereum ETF, the application for this investment fund was submitted by the Nasdaq stock exchange and, upon approval, will be managed by Toroso Investments, a New York-based investment advisory firm.
Hashdex Extends Unique Approach To Spot Ethereum ETF Application
On August 25, Hashdex submitted its Bitcoin spot ETF application to the SEC. This move received wide applause from various analysts because the asset manager employed a unique approach.
To explain, Hashdex proposes offering a Bitcoin ETF with a mixture of spot and futures contracts. In addition, the said Bitcoin ETF would be secured by Exchange for Physical (EFP) transactions on the Chicago Mercantile Exchange (CME) rather than a Coinbase Surveillance Sharing Arrangement (SSA), as is common with other applications.
Following the same approach, Hashdex intends to offer a spot Ether ETF, however, with a mixture of Ether future contracts, cash, and other cash equivalents.
The asset manager believes this method of diversification reduces the exposure of the proposed Ethereum ETF to the crypto market volatility, thus addressing the primary concerns of the SEC regarding crypto spot ETFs.
Hashdex stated in the application document:
Instead of holding 100% spot Ether, which could make it more susceptible to price manipulation in the spot market, the Fund will hold a mix of Spot Ether, Ether Futures Contracts, and cash.
Furthermore, there will be investment restrictions on this ETF that will limit the amount of spot Ether it can hold, thus maintaining the influence of the spot market at a “safe level.”
This ETF is also designed to offer dynamic adjustment, meaning the proportion of various constituents of the fund’s portfolio will change based on market conditions and regulatory developments.
The Spot Ethereum ETF Race Begins
In addition to Hashdex, prominent asset managers Ark Invest and VanEck filed for a spot Ethereum ETF applications with the SEC. Both applications were submitted by the Chicago Board Options Exchange (Cboe).
These are the only three companies seeking to offer a spot Ethereum ETF in the US for now. However, there could be more applications soon, as seen with the spot Bitcoin ETF applications in June.
Ether trades around $1,614.47 when writing, with a 0.43% gain in the last day. Meanwhile, the token remains the second largest cryptocurrency, with a market cap value of $194.11 billion.
ETH trading at $1,613.22 on the hourly chart | Source: ETHUSD chart on Tradingview.com
Featured image from The Journalist Resource, chart from Tradingview.