• Nasdaq has filed an application for Hashdex Ethereum Futures ETF.
• This filing emphasizes the influence of Brazil in the crypto ETF terrain.

Nasdaq has filed an application with the United States Securities and Exchange Commission (SEC) to list a hybrid mix of spot and futures contract Ethereum Exchange Traded Fund (ETF) for Brazilian crypto asset management firm Hashdex. The offering in question which Hashdex is pursuing approval for is named Hashdex Nasdaq Ethereum ETF. 

Markedly, Nasdaq’s application comes while the broad crypto industry is awaiting a decision from the SEC on the several applications submitted for a spot Bitcoin (BTC) ETF. Also, Volatility Shares, Bitwise, Roundhill, VanEck, ProShares, and Grayscale, have already submitted an application to the US markets regulator for listing their Ethereum Futures ETFs. Interestingly, the SEC has expressed its willingness and preparedness to openly evaluate the investment product. 

Seeing that the SEC is more accommodating towards an Ethereum ETF, it looks like fund managers are trying their luck with a middle-of-the-road alternative like a hybrid ETF. According to the September 11 filing, the share price may deviate from Ether’s spot price due to the nature of the application.

“Because the Fund’s investment objective is to track the price of the Benchmark by investing in Ether and Ether Futures Contracts, changes in the price of the Shares may vary from changes in the spot price of Ether,” the filing reads.

The fund will be managed and controlled by Toroso Investments, a commodity pool operator registered with the Commodity Futures Trading Commission (CFTC). In addition to its CFTC registration, the investment advisor is equally a member of the National Futures Association, expanding the robust backing the product will get if approved. 

In Toroso’s opinion, this investment strategy is focused on mitigating manipulation risks by diversifying holdings. It is also perceived as a solution to the recent concerns raised by the SEC about a spot Ethereum ETF. 

Beyond Ethereum ETF: Brazil Leads Crypto ETF Market 

On account of this offering, rather than have full exposure to spot Ethereum which makes investors more susceptible to prevalent market manipulation in the broader market, traders have access to a mix of spot ETH, Ethereum futures contracts, and even cash. It is worth noting that this unique portfolio structure has several investment limits, one of which is putting a cap on the amount of spot Ethereum the fund can hold to reduce the risk of manipulation.

As Hashdex makes this move for a hybrid ETH ETF, the company’s Chief Investment Officer Samir Kerbage strongly believes that Brazil is leading the way in the world of crypto ETFs. 

In 2021, the Brazilian Securities and Exchanges Commission (CVM) authorized the very first Ethereum ETF in Latin America. The Commission also approved a BTC ETF and both of them were later listed on B3, Brazil’s second-oldest stock exchange.

Kerbage acknowledged that the Brazilian government has prioritized a regulatory framework for investor protection. The Latin American nation is said to have the most advanced crypto ETF market in the world and other countries are advised to take their cue from Brazil in terms of their approach to ETFs.