Nasdaq has submitted a proposal to the SEC for a diversified cryptocurrency ETF, aiming to improve market integrity while providing investors with broad digital asset exposure.
Nasdaq has formally submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to launch a new exchange-traded fund (ETF) that tracks a basket of cryptocurrencies. The proposal aims to establish a regulatory framework that strengthens market oversight while providing investors with diversified exposure to digital assets.
Nasdaq’s ETF Proposal Explained
In a 131-page Form 19b-4 filed with the SEC, Nasdaq outlined its plan to adopt Rule 5712, which would allow for the listing of “Commodity and Digital Asset-Based Investment Interests.” The proposed rule would support the launch of the Hashdex Nasdaq Crypto Index US ETF (NCIQ), a fund designed to passively track the performance of multiple cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and potentially other assets.
To address regulatory concerns, 90% of the ETF’s holdings must come from assets traded on exchanges that either participate in the Intermarket Surveillance Group (ISG) or have formal surveillance-sharing agreements with Nasdaq. This structure mirrors compliance requirements used for commodity-based ETFs, ensuring transparency in portfolio management. Nasdaq argues that this approach would significantly reduce risks of market manipulation by requiring strict oversight of the ETF’s underlying assets.
Regulatory Precedents and Oversight Measures
Nasdaq’s filing builds upon previous SEC approvals of spot Bitcoin ETFs in January 2024 and spot Ether ETFs in May 2024. The proposal also references Coinbase Derivatives’ role in monitoring futures contracts for additional cryptocurrencies such as Chainlink (LINK), Litecoin (LTC), and Avalanche (AVAX). According to Nasdaq, this diversified asset approach makes market manipulation “significantly more complex” compared to single-asset ETFs.
To further enhance security and investor protection, all digital assets in the ETF would be custodied by regulated institutions like BitGo and Coinbase. The ETF’s creation and redemption process would operate on a cash-only basis, eliminating risks associated with in-kind asset transfers.
Additionally, Nasdaq’s proprietary pricing methodology would update the ETF’s net asset value (NAV) every 15 seconds, using real-time data from six pre-approved trading platforms. The system incorporates algorithmic checks to filter out pricing anomalies and outliers, ensuring more accurate valuations.
A Changing Regulatory Environment for Crypto ETFs
Nasdaq’s filing comes as the current U.S. administration signals a shift in crypto policy. With a focus on promoting digital currency adoption and reducing regulatory hurdles, recent policy actions include an executive order exploring a national Bitcoin reserve and a ban on central bank digital currencies (CBDCs).
By proposing a multi-asset crypto ETF, Nasdaq aligns with this new regulatory direction, positioning its fund as a potential benchmark for future cryptocurrency investment products. If approved, this ETF could pave the way for broader institutional adoption and establish new standards for digital asset market oversight.
What’s Next?
The SEC is now reviewing Nasdaq’s proposal, and its decision could have a major impact on the future of crypto ETFs in the U.S. If approved, the fund would offer investors regulated, diversified exposure to digital assets while ensuring stronger protections against market manipulation.
Stay updated on the SEC’s decision and how Nasdaq’s ETF proposal could shape the future of cryptocurrency investments.
