- Hashdex withdrew its application for a spot Ether ETF on May 24, a day after the SEC approved eight similar financial products.
- The proposed Hashdex ETF aimed to combine spot Ether holdings with Ether futures contracts to mitigate potential market manipulation.
- Hashdex did not provide reasons for withdrawing the application, and it is unclear if they will resubmit the proposal.
The cryptocurrency industry was rattled last week by the SEC‘s mixed signals on Ether exchange-traded funds (ETFs). While the regulator approved several filings for spot Ether ETFs, one notable application was withdrawn the day after. This highlights the SEC’s cautious approach as it balances innovation in the crypto space with appropriate investor protections.
Hashdex Withdraws Its Ether ETF Application
On May 24th, investment manager Hashdex withdrew its application for a spot Ether ETF. This occurred just one day after the SEC approved similar filings from issuers like VanEck, BlackRock, Fidelity, Grayscale, and others.
Hashdex’s proposed ETF would have held a mix of spot Ether and Ether futures contracts. The company claimed this could help mitigate manipulation compared to funds holding solely spot Ether.
The Brazilian firm did not explain its reasons for withdrawal. But it appears Hashdex no longer intends to pursue a single-asset Ether ETF.
Other Issuers Gain Approval Through Compromise
Unlike Hashdex, other ETF applicants made key concessions to appease the SEC. For example, Fidelity, ARK 21Shares, and Franklin Templeton agreed to remove staking support from their filings.
Some funds also committed to mirroring the Nasdaq Ether Reference Price. The goal is preventing manipulation by tracking an external benchmark.
Hashdex previously succeeded in launching a spot Bitcoin ETF using an alternative approach. For instance, that fund sourced BTC directly from exchanges rather than relying on Coinbase.
The Road Ahead for Crypto ETFs
While the SEC is clearly warming up to spot crypto ETFs, its selective approvals show there are still concerns to overcome. Asset managers hoping to enter the space may need to revise their methodologies to win regulatory approval.
With trillions of dollars held by institutional investors, there is little doubt that crypto ETFs could drive significant new capital into digital assets. But the SEC appears intent on ensuring these new vehicles meet high standards for transparency and integrity.
