Hashdex, a financial firm, has withdrawn its application for the Hashdex Nasdaq Ethereum ETF, according to documents filed with the U.S. Securities and Exchange Commission (SEC) on May 24. The filing, submitted on May 28, has surprised investors and industry observers, especially considering the recent approval of similar financial products by the SEC. The ETF aimed to combine spot Ether holdings with Ether futures contracts to mitigate market manipulation risks and track daily fluctuations in the Nasdaq Ether Reference Price. The reasons for the withdrawal remain undisclosed, but it is speculated that evolving regulatory conditions and internal strategic considerations might have played a role. The timing of the withdrawal, just a day after the approval of Ether ETFs from major players like VanEck, BlackRock, and Fidelity, highlights the competitive pressures and regulatory challenges in the market. Hashdex’s decision not to proceed with its Ether ETF is a departure from its previous success with spot Bitcoin ETFs that were approved by the SEC in January. The company’s Bitcoin ETF utilized a different strategy by sourcing spot BTC from physical exchanges within the CME market. The Hashdex Nasdaq Ethereum ETF was initially filed with the SEC in September and was managed by Toroso Investments. Despite the approval of other Ethereum ETF proposals, the issuers still need to have their S-1 registration statements become effective before trading can commence. Former U.S. SEC Chairman Jay Clayton expressed optimism about the future of these products but acknowledged that several key issues still need to be addressed. Bloomberg analyst Eric Balchunas predicts that the market’s reaction to Ethereum ETFs may be less enthusiastic compared to Bitcoin ETFs, estimating that Ethereum ETFs could trade at one-fifth the volume of Bitcoin ETFs. Initial capital between $1 and $2 billion in the first couple of weeks would be considered successful for the launch of Ethereum ETFs.
