According to documents filed with the U.S. Securities and Exchange Commission (SEC) on May 24, Hashdex has officially withdrawn its application for the Hashdex Nasdaq Ethereum ETF.
The filing, submitted on May 28, has left investors and industry observers speculating about the reasons behind this unexpected move, especially given the SEC’s recent approval of eight similar financial products.
Hashdex Withdraws Application for Spot Ether ETF Following SEC Approvals
Filing of Hashdex’s withdrawal. Source: US SEC
The Hashdex Nasdaq Ethereum (ETH) exchange-traded fund (ETF) aimed to combine spot Ether holdings with Ether futures contracts, a strategy designed to mitigate market manipulation risks. This approach is intended to track daily fluctuations in the Nasdaq Ether Reference Price, addressing regulatory concerns about price manipulation in the spot market.
The abrupt halt of Hashdex’s intentions to proceed with a single-asset Ether ETF has raised questions. While the precise reasons for the strategic withdrawal remain undisclosed, evolving regulatory conditions and internal strategic considerations within Hashdex might have played a role.
The timing of Hashdex’s withdrawal, just a day after the SEC approved Ether ETFs from major players like VanEck, BlackRock, and Fidelity, highlights the market’s competitive pressures and regulatory challenges. These approved spot-based Ether ETFs are set to launch on various exchanges in June, offering new investment opportunities in the Ethereum ecosystem.
Hashdex’s decision not to proceed with its Ether ETF represents a significant departure from its previous success with spot Bitcoin ETFs, which the SEC approved in January. Hashdex’s Bitcoin ETF utilized a distinct strategy by sourcing spot BTC from physical exchanges within the CME market, avoiding reliance on the Coinbase surveillance sharing agreement.
Nasdaq initially filed with the SEC in September to list the Hashdex Nasdaq Ethereum ETF. Managed by Toroso Investments, which is registered as a commodity pool operator with the Commodity Futures Trading Commission and a member of the National Futures Association, the fund planned to invest in ether, ether futures contracts listed on the CME, cash, and cash equivalents.
Ethereum ETFs Await S-1 Registration Approval Before Trading
Despite the approval of other Ethereum ETF proposals, the issuers still need to have their S-1 registration statements become effective before trading can commence. The SEC has recently begun discussions with issuers about their S-1 forms. While the duration of this process remains uncertain, some analysts speculate it could take weeks.
Former U.S. SEC Chairman Jay Clayton recently explained the SEC’s decision regarding spot ETH ETFs and outlined the next steps in the approval process. In an interview with CNBC, Clayton remarked that the recent approval of listing applications is a positive indicator for the future of these products, asserting that their trading is “inevitable.” However, he acknowledged that several key issues still need to be addressed.
Bloomberg analyst Eric Balchunas has suggested that the market’s reaction to Ethereum ETFs may not be as enthusiastic as it was for Bitcoin ETFs. Initially predicting that Ethereum ETFs could trade at only one-tenth of the volume of Bitcoin ETFs, Balchunas has since adjusted this estimate to one-fifth. He indicated that the launch would need initial capital between $1 and $2 billion in the first couple of weeks for it to be considered successful.
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