The U.S. Securities and Exchange Commission (SEC) has deferred its verdict on Hashdex’s ambitious proposal to launch an exchange-traded fund (ETF) that would directly encompass spot bitcoin and ether, two of the leading digital assets. This postponement extends the regulatory timeline, with the SEC now aiming to finalize its decision by September 30, 2024, as disclosed in an official filing on Friday.

In justifying this extension, the SEC articulated the necessity for an elongated period to thoroughly evaluate the proposed rule change and the multifaceted issues it presents. “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 agency stated, indicating the complexity and significance of the deliberations ahead.

Hashdex, a prominent player in crypto asset management, initiated this process by filing its registration statement, known as an S-1, on July 24, 2024. The proposed fund, dubbed the Hashdex Nasdaq Crypto Index US ETF, aims to hold both bitcoin and ether as its primary assets. However, the fund’s structure allows for adaptability, contingent on regulatory developments that might broaden the scope of eligible assets in the future.

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In its S-1 filing, Hashdex outlined its strategy, explaining, “If any crypto asset other than bitcoin and ether becomes eligible for inclusion in the Index, the Sponsor will transition to a sample replication strategy, with only bitcoin and ether in the same proportions determined by the Index.” The firm further clarified that should there be a need to revert to a full replication strategy, an additional rule filing under Rule 19b-4 of the Exchange Act would be required, mandating the Exchange to seek SEC approval to amend its listing rules to accommodate the new Index constituents.

The Hashdex Nasdaq Crypto Index US ETF is designed to list and trade on the Nasdaq, leveraging the Nasdaq Crypto Index US methodology. Nasdaq had already taken preliminary steps in this process by submitting a Form 19b-4 for the fund in June 2024.

As the SEC continues its thorough review, the industry watches closely, recognizing that this decision could set a significant precedent in the evolving landscape of cryptocurrency investment products in traditional financial markets.