The U.S. Securities and Exchange Commission (SEC) has given approval for the first exchange-traded funds (ETFs) that will provide investors with exposure to both Bitcoin and Ethereum. This approval is a significant milestone in the development of digital asset investment products and could pave the way for future multi-asset funds.
The Hashdex Nasdaq Crypto Index US ETF and the Franklin Crypto Index ETF are set to be listed on Nasdaq and Cboe BZX Exchange, respectively, and are expected to launch in early 2024. These ETFs will hold Bitcoin and Ethereum, with an initial allocation of around 80% Bitcoin and 20% Ethereum. The SEC's approval is subject to ongoing listing requirements, transparency in portfolio holdings, and measures to prevent fraud and market manipulation.
The approval of these dual Bitcoin-Ethereum ETFs comes at a time when the crypto ETF landscape in the United States is evolving. Currently, BlackRock's spot Bitcoin ETF, known as IBIT, is the market leader with approximately $56 billion in assets under management (AUM). Fidelity's FBTC and Grayscale's GBTC follow closely, each managing around $20 billion in AUM. However, there has been recent net outflows of about $671 million across major funds. The introduction of dual-asset products could attract a new wave of investors, particularly financial advisors seeking diversified options in the emerging cryptocurrency asset class.
The SEC's decision to approve these ETFs reflects a growing comfort level with regulated cryptocurrency markets. The SEC has implemented enhanced surveillance-sharing agreements to detect suspicious trading patterns and deter market manipulation, demonstrating its commitment to market integrity and investor protection. The approval of dual-asset ETFs may also open the door for more complex multi-asset crypto ETFs in the future, potentially including other cryptocurrencies like Litecoin or Hedera Hashgraph (HBAR).
The recent approval of dual Bitcoin-Ethereum ETFs aligns with the industry's push for broader offerings. Grayscale Investments has filed to convert its Solana Trust into a spot ETF, indicating a desire to expand beyond single-asset offerings. These pioneering ETFs are expected to simplify entry into the crypto markets and provide a regulated investment vehicle for traditional investors looking to explore digital assets. As the market continues to evolve, dual-asset ETFs could play a crucial role in shaping the future of cryptocurrency investment in the United States.