One of the SEC’s next crypto ETF rulings could prove a milestone for investors seeking to diversify their exposure within the segment.
Hashdex CIO Samir Kerbage pointed to the expected SEC decision in July that could allow crypto index products to expand the assets they hold.
The Hashdex Nasdaq Crypto Index US ETF (NCIQ), which launched in February, holds both BTC and ETH. Kerbage noted the holdings in that ETFs are “designed to evolve as the market evolves” — referring in part to regulatory developments.
The Brazil-based firm in March sought approval for NCIQ to invest in other assets that the international version of that index invests in, such as solana (SOL). Other assets include XRP, cardano (ADA), chainlink (LINK), avalanche (AVA), litecoin (LTC) and uniswap (UNI).
Kerbage told me previously Hashdex ultimately wants to create “the Nasdaq 100 for crypto.”
Grayscale filed last November to uplist its Digital Large Cap Fund — holding BTC, ETH, SOL, XRP and AVA at the time — to an ETF. The SEC’s final deadline to rule on that proposal is July 2. Clarity on that specific offering could extend to products by Hashdex, Bitwise and others.
Scott Johnsson, a general partner at Van Buren Capital, is indeed watching that date. He said in an April X post that because the index products have more undefined allocations, the SEC could adopt a general rule (rather than “case-by-case” rules for the proposed single-asset crypto ETPs).
“How they address the security question for each of the non-BTC/ETH allocations will draw the most attention,” Johnsson added.
Kerbage told Blockworks he expects to see the SEC allow US products to hold assets beyond BTC and ETH before approving more single-asset crypto ETFs.
“But this is the big question,” he noted. “If they’re not comfortable with having one specific single asset as an ETP, they still might allow an index to have a small allocation to that specific asset.”
Keep reading for more excerpts from Blockworks’ Q&A with Kerbage.
Blockworks: You mentioned in March that Hashdex was about to meet with the SEC. What did you discuss, and how do you expect the agency to proceed with the proposed crypto ETPs in front of them?
Kerbage: Our goal was to share the experience we’ve had outside of the US…and what we’ve seen working and not working. We think the SEC could approach this space by setting up a listing standard that will give more predictability.
So instead of having more than 100 ETF applications and everyone trying to figure out what the SEC is trying to approve…just set out the rules and we [won’t] need to guess.
We think the SEC has everything they need to make their own decision. They don’t necessarily need to change legislation.
Some other aspects are more complicated, like broker-dealer rules, the market structure, what is a security and what is not — so there’s a lot of complicated stuff around crypto. But I think clarity on the ETF side is within the SEC’s current mandate.
Blockworks: How do you view the demand for crypto index ETFs versus existing and future single-asset crypto products?
Kerbage: We think that crypto is way bigger than just bitcoin. But we think, at least for traditional investors, it’s too risky to try to pick the winners…especially advisers and financial professionals.
They’re looking for a small allocation in their portfolio — like 1% to 5%. If eventually they’re in a situation [where] they need to decide between bitcoin, ether, solana, XRP, litecoin, all these different assets, it’s just too complicated for a 1% position. So that’s why it just makes sense to go diversified and have an index approach.
This is what they do in all the different asset classes. When they decide to invest in emerging markets, they don’t go out to Brazil or South Africa trying to pick out specific stocks. They just buy an emerging market index. We think they should be looking at crypto assets the same.
Blockworks: Hashdex also offers a US ETF that only invests in bitcoin. Are investors still interested in that one now that you have the BTC/ETH option?
Kerbage: I would say 90% of the conversations we have are around indexes.
If you want to buy bitcoin, that’s fine, we have a bitcoin product and there [are] a lot of different bitcoin ETFs out there. But when you’re investing only in bitcoin, you’re making a decision to short the crypto market.
The biggest opportunity we see right now is getting exposure to the space with the optionality that crypto is bigger than just bitcoin.
Blockworks: How much more interest do you see from clients in a product like NCIQ when BTC and ETH prices are up, versus when they’re down?
Kerbage: Most of the advisers understand that this asset class is here to stay and they need to have a strategy around it. So they’re all looking at the space and studying it.
Of course, as we have positive price action, it helps. Because they have more questions from clients, and as they have more questions from clients, they’re more inclined to take action.
Blockworks: How might the latest vote against the stablecoin-focused GENIUS Act impact broader crypto regulatory progress and the timeline for more crypto ETF approvals?
Kerbage: It’s hard to talk about the timeline. In the executive branch, there’s definitely a strong guidance towards giving clarity to the industry and doing this fast.
