The U.S. Securities and Exchange Commission (SEC) has approved two novel hybrid spot cryptocurrency exchange-traded funds (ETFs) from asset managers Hashdex and Franklin Templeton, marking the first time regulators have allowed an index-based ETF that combines both bitcoin (BTC) and ethereum (ETH) in a single product. The decision, announced on December 20, 2024, represents a significant expansion of the digital asset ETF landscape beyond single-coin offerings.
Product Structure: 80% Bitcoin, 20% Ethereum with Future Flexibility
Hashdex‘s offering, officially named the Nasdaq Crypto Index US ETF, will list on the Nasdaq stock exchange and track the Nasdaq Crypto US Settlement Price Index. This index is designed to reflect the price performance of the most liquid digital assets traded in U.S. markets. Franklin Templeton’s counterpart, the Crypto Index ETF, will be listed on the Cboe BZX Exchange and follow the Institutional Digital Asset Index. Both funds allocate approximately 80% of net assets to spot bitcoin and 20% to spot ether, with provisions allowing future inclusion of additional crypto assets subject to SEC approval.
Unlike previous futures-based crypto ETFs, these products hold the underlying digital assets directly in cold storage reserves. This structure ensures that the ETF price closely tracks the spot market without the contango or backwardation distortions common in futures-based products. Investors gain diversified exposure to the two largest cryptocurrencies through a single equity security, eliminating the need for self-custody, wallet management, or dealing with exchange hacks.
Regulatory Milestone: From Single-Asset to Index ETFs
The SEC had previously approved spot bitcoin ETFs in January 2024 and spot ether ETFs in July 2024, but only on a single-asset basis. The approval of hybrid index ETFs required both firms to revise their prospectuses multiple times to incorporate enhanced investor safeguards and market surveillance mechanisms aligned with the Securities Exchange Act of 1934. Nate Geraci, co-founder of The ETF Institute, commented: “It will be interesting to see if Blackrock or others attempt to piggyback on this and launch similar ETFs. Regardless, I expect there will be meaningful demand for these products. Advisors LOVE diversification. Especially in an emerging asset class such as crypto.”
Market Implications and Future Outlook
The arrival of hybrid spot ETFs is expected to simplify portfolio construction for financial advisors and institutional investors. Instead of buying separate bitcoin and ether ETFs, a single fund provides balanced exposure with automatic rebalancing. Both products are slated for launch in January 2025, and industry observers predict strong initial inflows given the pent-up demand for diversified crypto exposure in regulated wrappers. The approval may also encourage other issuers—including BlackRock, Fidelity, and VanEck—to file for similar index-based products, potentially accelerating the convergence of traditional finance and digital assets. Should the SEC continue its permissive stance, multi-asset crypto ETFs incorporating tokens like Solana or Cardano could follow in subsequent years.