In a landmark decision for the cryptocurrency industry, the U.S. Securities and Exchange Commission approved the first-ever hybrid Bitcoin-Ethereum exchange-traded funds on December 19, 2024. The regulatory green light went to two major financial institutions — Hashdex and Franklin Templeton — marking a significant expansion of regulated crypto investment products available to mainstream investors.
The newly approved funds, Hashdex’s Nasdaq Crypto Index US ETF and Franklin Templeton’s Crypto Index ETF, represent a new category of investment vehicle that bundles both Bitcoin and Ethereum into a single publicly traded product. The SEC spent six months reviewing the applications before granting approval, a process that built upon the regulatory framework established by the spot Bitcoin ETF approvals earlier in 2024.
TL;DR
- The SEC approved the first hybrid Bitcoin-Ethereum ETFs on December 19, 2024
- Hashdex and Franklin Templeton received approval for combined BTC/ETH funds
- The ETFs are market-cap weighted at approximately 80% Bitcoin and 20% Ethereum
- Launch is expected in January 2025
- BlackRock’s IBIT leads the Bitcoin ETF market with $56 billion in assets
How the Hybrid ETFs Work
The structure of these new funds represents an innovative approach to crypto investing. Rather than tracking a single cryptocurrency, both ETFs hold a basket of digital assets weighted by free-float market capitalization. According to the SEC filing, “The proportion of bitcoin and ether to be held by each Trust will be based on free-float market capitalizations.” Given Bitcoin’s dominant market position, this translates to an approximate allocation of 80% Bitcoin and 20% Ethereum.
Senior Bloomberg ETF analyst Eric Balchunas confirmed the approval and provided context on the fund structure. “They’re market cap weight so 80/20 BTC/ETH approx,” Balchunas noted on social media. “Notable that Hashdex and Frankie are first. Good for them.”
The funds will trade on Nasdaq and update their net asset values every 15 seconds during regular trading hours, matching the transparency and real-time pricing that institutional investors expect from traditional ETF products. This feature addresses one of the key concerns that regulators have raised about cryptocurrency investments — the need for accurate, timely pricing.
Regulatory Framework and Market Integrity
The SEC’s approval came with specific requirements designed to protect investors and maintain market integrity. Exchanges hosting the ETFs must share their trading data to help detect and prevent market manipulation — a condition that mirrors the surveillance agreements established for spot Bitcoin ETFs approved in January 2024.
The regulatory filing emphasizes that the funds rely on data from CME Bitcoin and Ethereum futures markets to establish reference prices, leveraging the regulated derivatives market as a benchmark for valuation. This approach addresses concerns about the reliability of crypto exchange pricing and provides an additional layer of institutional credibility.
The approval process benefited from the precedent set by the spot Bitcoin ETF approvals nearly a year earlier. Regulators were able to fast-track the hybrid products since they share many structural similarities with already-approved crypto funds, streamlining what could otherwise have been a protracted regulatory review.
Market Impact and Competitive Landscape
The hybrid ETF approvals arrive at a time of explosive growth in crypto investment products. BlackRock’s iShares Bitcoin Trust (IBIT) has emerged as the dominant player in the space, accumulating $56 billion in assets under management since its January 2024 launch. Fidelity’s Wise Origin Bitcoin Fund (FBTC) and Grayscale’s Bitcoin Trust (GBTC) each manage approximately $20 billion in assets.
However, the December 19 session also highlighted the volatility inherent in crypto markets. On the same day as the ETF approval, investors pulled $671 million from major Bitcoin funds, reflecting broader market turbulence triggered by the Federal Reserve’s hawkish policy outlook. Despite the outflows, the Ethereum ETF sector continued to attract significant institutional interest.
The combination of Bitcoin and Ethereum in a single product addresses a growing demand from financial advisors and wealth managers who seek diversified crypto exposure without managing multiple positions. Nate Geraci, president of The ETF Store, highlighted this appeal: “Advisors LOVE diversification. Especially in an emerging asset class such as crypto.”
What This Means for the ETF Industry
The approval of hybrid crypto ETFs opens the door for a new wave of product innovation. Industry observers widely expect that other major asset managers, including BlackRock, may launch similar combined products to compete with Hashdex and Franklin Templeton’s first-mover advantage.
The timing of the approval is particularly notable. Coming just weeks before the end of 2024, the funds are expected to begin trading in January 2025, providing investors with a new tool for portfolio allocation at the start of a new year. The products will offer exposure to the two largest cryptocurrencies by market capitalization through a single ticker, simplifying the investment process for retail and institutional buyers alike.
The broader implications extend beyond the immediate market impact. Each new regulated crypto product strengthens the case for cryptocurrency as a legitimate asset class within traditional finance. The SEC’s willingness to approve increasingly complex crypto investment vehicles signals a gradual acceptance of digital assets within the regulatory framework, even as questions about classification and oversight continue to evolve.
Why This Matters
The approval of hybrid Bitcoin-Ethereum ETFs represents a meaningful evolution in how traditional finance interacts with digital assets. By packaging the two largest cryptocurrencies into a single regulated product, the SEC has created a new pathway for mainstream investors to gain diversified crypto exposure without dealing with exchanges or self-custody. For the crypto industry, this approval validates the maturation of the market infrastructure and signals that regulators are increasingly comfortable with more sophisticated crypto investment products. The race among asset managers to capture this growing market is just beginning.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk, and past performance does not guarantee future results. Always conduct your own research before making investment decisions.
80/20 btc/eth split based on market cap weighting is actually elegant. gives eth exposure without the degenerate altcoin risk
hashdex and franklin templeton both getting approved on the same day. the sec is clearly accelerating crypto etf approvals now
six months of review for a basket etf when spot btc took a decade. the regulatory moat is crumbling fast
blackrock ibit sitting at 56B in assets and competitors are still launching new products. the etf race is far from over
launch expected january 2025 per the article. wonder if the inflows will even be meaningful next to ibit