SEC Approves First BTC-ETH Index ETFs

The Securities and Exchange Commission (SEC) approved two exchange-traded funds (ETFs) tracking indexes that include ETH and BTC, offering exposure to both cryptocurrencies in a single place.

The applications by the Hashdex Nasdaq Crypto Index US ETF and Franklin Templeton’s Franklin Crypto Index ETF are the first crypto index funds of this kind approved by the agency.

Both funds indicated in the applications that they would like to add other cryptocurrencies to their indexes, with Hashdex specifying Avalanche’s AVAX, Chainlink’s LINK and Litecoin’s LTC.

Both indexes are market cap weighted, so they would be approximately 80% bitcoin and 20% ether, said Bloomberg senior ETF analyst Eric Balchunas, adding that they will likely launch in January. The funds’ main custodians will be BitGo, Coinbase, Fidelity and Gemini.

“I expect there will be meaningful demand for these products,” said ETF Store President Nate Garaci on Twitter. “Advisors LOVE diversification. Especially in an emerging asset class such as crypto.”

The current separate bitcoin and ether ETFs have a combined $125 billion assets under management, according to Coinglass.

Wait till next year

Saying it is “not rocket science” to figure out why these two ETFs were approved, Garaci pointed to language in the SEC’s order noting that the two funds “are substantially similar to those of the spot bitcoin ETP and spot ether ETP proposals approved in prior Commission orders."

He suggested that additional tokens will have to wait for the new regime at the SEC. That transition will begin after Donald Trump takes office on Jan. 20. Gary Gensler, the Chairman of the SEC and a strong crypto critic, will resign the same day.

That said, it will take a while to get new SEC leadership confirmed by the Senate and in place, and crypto ETFs likely won’t be too high up their agenda, despite the President-elect’s enthusiasm for cryptocurrencies.

On Tuesday, Bloomberg analyst James Seyffart predicted that Litecoin’s LTC and Hedera’s HBAR are the likely next candidates to be approved for ETFs. Litecoin is a fork of Bitcoin, he noted, while HBAR is not considered a security.

Pointing out that a Solana ETF filing was recently rejected, Seyffart added that tokens like SOL and XRP will have to wait for the new administration “before being seriously considered” and even then “complex legal issues around these tokens and others relating to their status as securities may need to be resolved.