SEC Clears the Path for Hybrid Bitcoin-Ethereum ETFs
In Brief
The SEC approves the first-ever hybrid Bitcoin-Ethereum index ETFs, marking a significant shift in cryptocurrency investment, offering a regulated, diverse route into digital assets.
The SEC has just paved the way for a groundbreaking shift in cryptocurrency investment with the approval of the first-ever hybrid Bitcoin-Ethereum index ETFs. This landmark decision from the U.S. financial regulator marks the beginning of a new chapter in crypto accessibility, as these ETFs promise to offer investors a regulated, diverse route into the world of digital assets.
With major players like Hashdex and Franklin Templeton leading the charge, these ETFs are set to launch in January, offering a strategic balance of Bitcoin and Ethereum—potentially expanding to include other cryptocurrencies in the future.
This move signals the growing acceptance of multi-asset crypto funds and the possibility of including additional digital assets in the future.
ETFs to Launch in January
These ETFs will hold Bitcoin and Ethereum in proportions based on their market caps, with Bitcoin currently making up 80% and Ethereum 20%. Looking ahead, the ETFs could potentially incorporate additional cryptocurrencies, subject to regulatory approval.
In light of the SEC’s recent clearance, The ETF Store president Nate Geraci suggested that other issuers, such as financial behemoth BlackRock, may try to introduce comparable products.
Given that investors like diversity, the expert has forecasted substantial demand for these items. Both of these exchange-traded funds are based on market capitalization and include around 80% Bitcoin.
Erik Balchunas of Bloomberg says that the newly approved ETFs will probably go public in January.
The funds need to be transparent about their pricing and portfolio holdings in order to comply with continuous listing standards. When standards aren’t satisfied, any exchange may start the delisting process. There will be the same rules for trading ETF shares as there are for trading other stocks.
ETFs Cementing their Position
In August, the SEC requested additional time to review the proposed ETFs to ensure adequate consideration of the rule change and related issues.
Franklin Templeton’s filing, however, received “accelerated approval” due to its similarity to already-approved spot crypto exchange-traded products (ETPs), with strong market correlations to CME futures.
One crucial factor in this approval was the surveillance-sharing agreement, where exchanges agree to share trading data to help detect and prevent market manipulation. The SEC highlighted that the hybrid Bitcoin-Ethereum ETF demonstrated a “regulated market of significant size,” aligning with established commodity-based trust standards.
This approval signals the SEC’s comfort with dual-asset frameworks, provided they meet regulatory requirements and correlate well with traditional markets. Previously, spot crypto ETFs were limited to single-asset exposure, marking this approval as a step toward broader acceptance of multi-asset crypto funds.
Nate Geraci, president of the ETF Store, discussed the approval in a thread on X, noting that advisors are particularly fond of diversification, especially within emerging asset classes like crypto. He also expressed his expectation that these products would see significant demand.
Details About The Crypto Index ETFs
The cryptocurrency ETF market is gaining momentum, with major asset managers making significant strides in the space. Hashdex, for instance, amended its S-1 filing with the SEC in October and submitted a second revision in late November.
This filing revealed that digital assets like Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC) could potentially be added to its crypto ETF if they meet eligibility criteria and gain regulatory approval. Franklin Templeton, which filed its own S-1 for a crypto index ETF in August, also leaves room for expanding its offerings but hasn’t specified which cryptocurrencies may be included.
Both ETFs will rely on trusted custodians—Hashdex’s fund will use Coinbase, BitGo, Fidelity, and Gemini, while Franklin Templeton’s will rely on BitGo and Coinbase. The competition in the crypto ETF space has intensified, driven by the success of ETFs launched earlier in 2024. Experts suggest that crypto spot ETFs in the U.S. may soon surpass gold ETFs in total assets under management.
Globally, the acceptance of regulated crypto ETFs is growing, and analysts predict that dual Bitcoin and Ether ETFs, such as Franklin Templeton’s proposal, are likely to gain approval in 2025. As Bloomberg analysts suggest, dual Bitcoin and Ether ETFs “are among the most likely to gain approval in 2025.”
With the SEC’s recent appointment of Paul Atkins as chairman and increasing political support for digital assets, optimism in the market is high. The approval of these ETFs provides investors with a regulated, familiar method to gain exposure to top cryptocurrencies, helping to lower barriers to entry for those hesitant to invest directly due to volatility concerns.
More ETFs to Come?
Experts like Eric Balchunas expect that Litecoin ETFs could be up next for approval. Because it is a Bitcoin fork, Litecoin complies with U.S. regulatory requirements and might be considered a commodity. But there may not be much interest from big-time investors. At the same time, the persistent uncertainty may cause further delays for Solana and XRP ETFs.
The SEC is changing its stance on cryptocurrency. The agency’s previously strict approach may be loosening up after recent changes in leadership, such as the appointment of the new SEC head, Paul Atkins. With Atkins at the helm, the SEC may change its mind on cryptocurrency exchange-traded funds (ETFs) down the road.
Disclaimer
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About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
