June 5, 2024
Hashdex Pulls Ether ETF Application
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Hashdex Pulls Ether ETF Application

Investment manager Hashdex has withdrawn its application for a spot Ether exchange-traded fund (ETF), as revealed in documents filed with the United States Securities and Exchange Commission (SEC). According to a filing from May 28, Hashdex pulled its application for the proposed rule change that would have allowed the debut of its Hashdex Nasdaq Ethereum ETF. The withdrawal occurred on May 24, shortly after the SEC approved eight similar financial products.

Hashdex’s notice of withdrawal. Source: U.S. SEC

Reasons for Withdrawal and Future Plans

Although the SEC filings lack specific reasons for the withdrawal, it’s uncertain if Hashdex plans to resubmit. Despite reaching out, clarification from Hashdex is pending. Hashdex’s spot Ether ETF application differed by integrating spot Ether holdings with Ether futures contracts to mitigate manipulation risks.

Contrasts with Other Ether ETF Applicants

In contrast to Hashdex’s approach, other applicants such as Fidelity, ARK 21Shares, and Franklin Templeton focused solely on spot-based Ether ETFs. These applicants made late amendments to their filings, such as removing support for ETH staking, in response to feedback from the SEC. Notably, Hashdex’s ETF aimed to mirror daily fluctuations in the Nasdaq Ether Reference Price to alleviate regulatory concerns regarding market manipulation.

The SEC’s approval of 19b-4 filings from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise on May 23 paved the way for spot Ether ETFs to be listed and traded on their respective exchanges. These funds are expected to launch in June. Hashdex’s unique strategy for its Ether ETF sought to provide an alternative approach to the market, combining spot Ether holdings with Ether futures contracts. According to its initial filing from September 2023:

“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.”

Hashdex’s Track Record and Previous Ventures

Hashdex, known for its involvement in spot Bitcoin ETFs approved in January, employs distinct strategies compared to other asset managers. For example, the company’s Bitcoin ETF did not rely on the Coinbase surveillance sharing agreement, opting instead to source spot BTC from physical exchanges within the CME market. This strategic approach reflects Hashdex’s commitment to innovation and its willingness to explore alternative methods to navigate regulatory requirements and market dynamics. As the landscape of cryptocurrency ETFs evolves, Hashdex’s decisions and strategies continue to shape the industry’s trajectory.

Photo by Bastian Riccardi

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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