SEC Approves First Hybrid Bitcoin-Ethereum ETFs From Hashdex and Franklin Templeton
In a landmark move for the crypto industry, the U.S. Securities and Exchange Commission (SEC) has approved the first-ever hybrid Bitcoin-Ethereum exchange-traded funds (ETFs). The two newly authorized ETFs, the Hashdex Nasdaq Crypto Index US ETF and the Franklin Crypto Index ETF, will offer exposure to both Bitcoin and Ethereum under a single financial product.
This approval represents a significant step forward in the evolution of crypto ETFs, moving beyond single-asset products to multi-asset strategies. The funds will be listed on Nasdaq and the Cboe BZX Exchange, respectively, and are expected to officially launch in January 2025, according to Bloomberg ETF analyst Eric Balchunas.
How the Bitcoin-Ethereum Hybrid ETF Works
Unlike single-asset ETFs that focus exclusively on Bitcoin or Ethereum, the new hybrid ETFs will combine exposure to both of these leading cryptocurrencies. The ratio of Bitcoin to Ethereum in the funds will be based on free-float market capitalization, which currently points to an 80% Bitcoin and 20% Ethereum split.
The funds will adhere to the same compliance and transparency standards required for traditional equity ETFs. This includes real-time tracking of intraday indicative values, which will be published every 15 seconds during trading hours. If the funds fail to meet ongoing listing requirements, the exchanges have the authority to initiate delisting procedures.
Why This Approval Matters
The hybrid ETF marks a new era in cryptocurrency investing, offering investors diversified exposure to the two most valuable digital assets in one simple, regulated product. Previously, spot ETFs were limited to single-asset exposure, but the SEC’s decision to greenlight a multi-asset approach reflects a growing comfort with crypto products that resemble traditional commodity-based trusts.
One of the key factors behind the SEC’s approval was the presence of surveillance-sharing agreements. These agreements enable exchanges to share trading data and essential market information, ensuring market transparency and helping to prevent fraud and manipulation. This structure mirrors the regulatory approach taken for commodity-based ETFs, such as those based on gold or oil.
Accelerated Approval for Franklin Templeton
While the approval process for crypto ETFs is typically long and uncertain, the SEC granted accelerated approval to Franklin Templeton’s hybrid ETF. The regulator cited the product’s similarity to previously approved spot crypto exchange-traded products (ETPs) and the strong correlation between its structure and existing CME futures products.
The Franklin Templeton filing moved forward more quickly after the SEC requested an extended review period in August 2024, stating it needed more time to assess the proposed rule change and the issues it raised. This accelerated approval suggests that the SEC is becoming more comfortable with hybrid crypto products that offer exposure to multiple assets.
Hashdex and Franklin Templeton Join the Ranks of Major ETF Players
The launch of these hybrid ETFs adds two more names to the growing roster of high-profile companies offering crypto ETFs. Currently, BlackRock’s iShares Bitcoin Trust (IBIT) dominates the crypto ETF landscape with over $56 billion in assets under management (AUM). Other notable players include Fidelity’s Bitcoin ETF (FBTC) and Grayscale’s Bitcoin Trust (GBTC), each managing around $20 billion in AUM.
Unlike these single-asset ETFs, the Hashdex and Franklin Templeton ETFs will combine Bitcoin and Ethereum into a single product. This approach is seen as a “diversification play” that could appeal to investors seeking broader exposure to the crypto market.
Market Reactions and Industry Insights
ETF analysts and industry experts have hailed the approval as a “game-changer” for the crypto ETF market. Nate Geraci, president of The ETF Store, stated that the move would create strong demand from investors who prefer diversified exposure to emerging asset classes like crypto.
“Advisors love diversification, especially in an emerging asset class such as crypto,” Geraci said, adding that he expects other ETF issuers to follow suit with similar dual-asset products.
The approval also opens the door for other multi-asset ETFs, with some analysts predicting that funds offering exposure to other cryptocurrencies like Solana (SOL) or Layer-2 tokens could be on the horizon.
Growing Institutional Demand for Crypto ETFs
The timing of the SEC’s approval could not be more significant. Recent inflows into Ethereum-based ETFs have highlighted growing investor interest in diversified crypto exposure. For instance, BlackRock’s Ethereum ETF pulled in over $1.5 billion in new investments during a 16-day streak of inflows, according to CoinGlass data.
These inflows reflect an increasing appetite among both retail and institutional investors for crypto exposure. By combining Bitcoin and Ethereum in one ETF, Hashdex and Franklin Templeton aim to attract a new wave of investors looking for efficient, diversified access to the two leading cryptocurrencies.
Surveillance-Sharing Agreements Pave the Way for Broader Approval
A key component of the SEC’s approval was the establishment of surveillance-sharing agreements with regulated markets of “significant size.” These agreements enable the exchanges listing the ETFs to detect and prevent market manipulation, aligning the crypto ETF market with standards already in place for traditional commodity ETFs.
This regulatory shift suggests that the SEC is becoming more comfortable with crypto ETFs that resemble existing commodity-based trusts. While earlier spot ETFs faced hurdles due to concerns over market manipulation, these dual-asset ETFs have managed to secure approval by incorporating stronger surveillance mechanisms.
What’s Next for Crypto ETFs?
With the approval of the hybrid Bitcoin-Ethereum ETFs, the crypto industry is now looking toward what comes next. Grayscale has already filed to convert its Grayscale Solana Trust (GSOL) into a spot ETF listed on the NYSE Arca. If successful, this would mark another major evolution in the crypto ETF landscape, expanding access to a wider range of digital assets.
Other major players in the ETF space, including BlackRock, Fidelity, and Ark Invest, may also consider launching hybrid crypto ETFs to compete with Hashdex and Franklin Templeton. Given the SEC’s growing openness to multi-asset ETFs, it’s possible that we’ll see funds that include a broader range of assets like Solana (SOL), Avalanche (AVAX), or Polygon (MATIC).
Conclusion
The SEC’s approval of hybrid Bitcoin-Ethereum ETFs from Hashdex and Franklin Templeton is a groundbreaking development for the crypto industry. By allowing diversified exposure to the two largest cryptocurrencies, these products offer investors a new way to participate in the crypto market while adhering to regulatory standards.
With the ETFs set to launch in January 2025, the crypto industry is entering a new era of investment accessibility. The inclusion of surveillance-sharing agreements, transparency protocols, and real-time tracking of asset prices has satisfied regulatory concerns, paving the way for future multi-asset crypto ETFs.
As interest in crypto ETFs continues to grow, analysts predict that other issuers will soon seek approval for similar products. For now, the spotlight is on Hashdex and Franklin Templeton, who are set to shape the future of multi-asset crypto investment.