Brazilian asset manager Hashdex has launched the world’s first crypto asset ETF on the Bermuda Stock Exchange.
The fund tracks a diversified crypto asset index created by Hashdex in partnership with Nasdaq.
The Hashdex Nasdaq Crypto Index ETF (HDEX BH) provides accredited non-US investors with exposure to the largest and most-liquid cryptocurrencies by tracking an index developed in partnership with Nasdaq.
The underlying Nasdaq Crypto Index is designed to be broadly representative of the investable cryptocurrency market for institutional investors.
To be eligible for inclusion, a cryptocurrency must have a free-floating price, trade in US dollars, and meet minimum liquidity standards. It must also be traded on at least three ‘core exchanges’ and be supported by at least two ‘core custodians’.
The list of ‘core exchanges’ and ‘core custodians’ is determined by Nasdaq’s Crypto Index Oversight Committee on an annual basis.
Constituents are weighted by float-adjusted market capitalization, while any cryptocurrency that represents less than 0.5% of the total index weight is removed. Reconstitution and rebalancing occur on a quarterly basis.
According to Nasdaq, the methodology ensures that the index targets only the most-liquid and mature cryptocurrency markets while remaining adaptable to add new assets as the segment evolves.
As of the last review in December, the index comprised six cryptocurrencies: bitcoin (78.6%), ethereum (16.9%), litecoin (1.6%), bitcoin cash (1.0%), chainlink (1.3%), and stellar lumens (0.7%).
The ETF is 100% backed by ‘physical’ holdings of the underlying cryptocurrencies which are held in institutional-grade cold storage with Coinbase, Fidelity Digital Assets, and BitGo Trust acting as custodians.
The fund comes with a management fee of 1.00%.
Marcelo Sampaio, CEO of Hashdex, commented: “With support from Nasdaq, Nasdaq’s calculation agent CF Benchmarks, and Bermuda Stock Exchange, we are delighted to bring to market the world’s first crypto ETF. This is a great achievement that shows the maturity of the cryptocurrency market which garnered a much higher level of respect in 2020. In addition, the launch also consolidates our presence as a relevant global player in this segment. The product should also accelerate the entry of institutional investors in crypto, a trend that has gained incredible momentum in the past months.”
Stephen Koshansky, Head of Digital Asset Index Products and Research at Nasdaq, added: “Institutional interest in digital assets is growing rapidly which necessitates the creation of an adaptable industry standard index that can both accurately represent the market and remain a relevant benchmark as the asset class matures. Nasdaq has worked closely with Hashdex to design criteria for a rules-based methodology that we believe accomplishes these objectives.”