Will the SEC Approve Hashdex’s Crypto ETF? Here’s What You Need to Know

Crypto exchange-traded funds (ETFs) have been a hot topic for years. While some are already available, the big question remains: will the SEC approve Hashdex’s proposed crypto ETF, and what makes it stand out? On November 25, 2024, the asset management firm Hashdex took a step forward by submitting its second amended S-1 filing for a cryptocurrency-focused ETF.

But will the SEC give it the green light?

A New Way to Invest in Crypto

So, what’s the deal with Hashdex’s proposal? Well, it’s all about offering investors exposure to a diversified portfolio of cryptocurrencies—starting with Bitcoin (BTC) and Ether (ETH). These two coins are the only assets in the Nasdaq Crypto US Index, making them the focus of the ETF for now. Bitcoin and Ether have a strong market track record, which makes sense for the ETF’s initial focus.

However, Hashdex plans to expand the ETF to include more digital currencies over time.

Why the SEC Is Taking Its Time

The SEC has been cautious when it comes to approving crypto-related financial products. When Hashdex first filed for its ETF, the SEC asked for more time to review it, leading the firm to revise its proposal. This careful approach isn’t new; the SEC has always been cautious with crypto.

However, Hashdex continues to refine its filing to meet the SEC’s standards, raising the question: how long will this process take?

Why Crypto ETFs Are Gaining Popularity

Crypto ETFs are becoming increasingly popular, and for good reason. Much like traditional index funds (like the S&P 500), crypto ETFs allow investors to gain exposure to a broad market without the need to buy individual coins. This makes it easier to get involved in the crypto space with less risk.

Katalin Tischhauser from Sygnum pointed out that crypto index ETFs appeal to those who prefer traditional investment methods. For many, it’s a simple, diversified way to enter the world of crypto.

The Competition Is Heating Up

Hashdex isn’t the only company working on a crypto ETF.

Other firms, like Franklin Templeton and Grayscale, are also developing their own crypto-focused ETFs. Franklin Templeton’s ETF will track the CF Institutional Digital Asset Index, similar to Hashdex’s focus on Bitcoin and Ether. Grayscale, meanwhile, is aiming to turn its Digital Large Cap Fund—which includes coins like Solana and XRP—into an ETF.

With several firms vying for approval, it’ll be interesting to see who gets the go-ahead first.

SEC Is Due for A Leadership-Change!

The future of crypto ETFs may depend on changes within the SEC. Gary Gensler, the current SEC chair, is set to retire in January 2025, just as Donald Trump starts his second presidential term.

Trump has been a strong supporter of cryptocurrency, and analysts believe that a change in SEC leadership could shift how crypto ETFs are evaluated. If the SEC takes a more lenient stance under new leadership, Hashdex’s ETF—and others like it—could soon be approved.

It’s definitely something to keep an eye on in the coming months.