SEC Delays Decision on Hashdex's Spot Bitcoin ETF Conversion

The SEC has announced a delay in its decision-making process on Hashdex’s application to convert its existing Bitcoin futures ETF into a spot product.

The agency now aims to make a final determination by January 1, 2024.

Hashdex’s ETF Conversion Application Faces SEC Delay

Hashdex, a prominent fund manager, applied in September to transform its ETF listed on the New York Stock Exchange into a spot exchange-traded fund. This move is noteworthy because Hashdex’s proposal involves a unique approach to managing the ETF’s assets.

The fund manager plans to hold a diversified mix of assets, including Bitcoin Futures Contracts, Spot Bitcoin, and cash. This strategy is designed to mitigate the risks associated with market manipulation and enhance the ETF’s stability.

In response to Hashdex’s application, the SEC issued a filing on November 15, explaining its decision to extend the review period by an additional 45 days. The agency cited the need for more time to thoroughly assess the proposed rule change and address the issues raised during the evaluation process.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein,” the SEC stated in its announcement.

SEC Delays Decision on Grayscale’s Futures-Based ETH ETF

Simultaneously, the SEC delayed its decision on Grayscale’s attempt to launch a new futures-based Ethereum ETF. The delay in this case is related to a rule change associated with Grayscale’s proposed Ethereum futures ETF.

Grayscale Investments filed for a new ETF tracking Ethereum futures in September under the Securities Act of 1933 and the Investment Company Act of 1940. The SEC has previously approved Bitcoin futures ETFs registered under both Acts.

These delays come at a time of heightened anticipation within the cryptocurrency industry for the federal regulator’s potential approval of a spot Bitcoin ETF. The SEC has, thus far, rejected all attempts to list such a product for the general investing public.

In 2023 alone, more than a dozen companies have submitted applications to launch spot Bitcoin ETFs, and several others are seeking approval for similar products tied to Ethereum, the second-largest cryptocurrency by market capitalization. The regulator has yet to indicate how it might ultimately rule on these latest submissions, leaving the industry in anticipation and uncertainty.