Asset manager Hashdex has revised its S-1 regulatory filing to broaden its cryptocurrency index exchange-traded fund (ETF), indicating plans to incorporate seven additional altcoins alongside Bitcoin (BTC) and Ethereum (ETH), as detailed in a filing made to the Securities and Exchange Commission (SEC) on March 14.
The updated filing aims to add Solana (SOL), XRP, Cardano (ADA), Chainlink (LINK), Avalanche (AVAX), Litecoin (LTC), and Uniswap (UNI) to the Hashdex Nasdaq Crypto Index US ETF.
Launched in February 2024, the fund currently invests solely in Bitcoin and Ethereum and tracks the Nasdaq Crypto US Index, which exclusively monitors these two leading cryptocurrencies by market cap.
This filing outlines a proposed transition to the more inclusive Nasdaq Crypto Index (NCI), which covers a broader range of digital assets beyond BTC and ETH.
Hashdex has yet to provide a definitive timeline for this transition, and the SEC must approve the suggested modifications before they can be implemented.
Rising Altcoin Interest
Earlier versions of Hashdex’s S-1 indicated a potential to diversify the ETF’s asset composition, but this is the first instance where specific altcoins have been identified.
The filing characterizes the selected assets as decentralized networks reliant on public key cryptography for security, with their valuations primarily driven by market supply and demand dynamics.
Although initial inflows to these ETFs have been modest, they represent the first US funds aimed at providing diversified exposure to the cryptocurrency market. Industry experts believe that crypto index ETFs are a logical next step in expanding investment opportunities following the approval of spot Bitcoin ETFs in January 2024.
Other asset managers, such as Grayscale, are also looking to expand their ETF portfolios. Grayscale has sought to convert its Digital Large Cap Fund, which holds BTC, ETH, SOL, and XRP, into an ETF, thereby introducing another multi-asset fund into the market.
Regulatory Perspectives
This year, the SEC has noted various ETF filings pertaining to cryptocurrencies, including those proposing staking features, in-kind redemptions, and expanded altcoin-based funds.
However, the timeline for approvals remains unpredictable as regulators continue to assess the potential risks connected to broader exposure to the cryptocurrency market.
The proposed expansion by Hashdex highlights the increasing demand for more comprehensive cryptocurrency investment products, but final approval will hinge on regulatory reviews.
If approved, the fund could provide US investors with an alternative to single-asset crypto ETFs, enhancing diversified exposure within a regulated environment.