The Nasdaq Crypto Index expanded its lineup from five to nine digital assets. The SEC’s decision is pending on whether the Hashdex NCIQ ETF, which tracks this index, will be allowed to align its portfolio with the expanded index.
The Nasdaq Crypto Index recently expanded its composition from five to nine digital assets, adding Ripple (XRP), Solana (SOL), Cardano (ADA), and Stellar Lumens (XLM). Previously, the index included only Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Chainlink (LINK), and Uniswap (UNI).
The updated index serves as the benchmark for the Hashdex Nasdaq Crypto Index US ETF. However, the NCIQ ETF is currently not permitted to hold the newly added assets due to existing SEC rules, which limit it to investing in Bitcoin and Ethereum only.
To change this, Nasdaq ISE, LLC filed a proposed rule change with the SEC on March 7. If approved, the ETF would be allowed to align its holdings with the revised index and invest directly in the additional altcoins. The SEC has until Nov. 2 this year to issue a decision.
In the meantime, Hashdex is using a sampling strategy, adjusting its allocations to Bitcoin and Ethereum in an effort to reflect the broader index’s performance. However, this workaround introduces tracking error risk, where the ETF’s returns may diverge from those of the index it aims to follow.
The Hashdex Nasdaq Crypto Index US ETF is a regulated investment fund that aims to give investors diversified exposure to the crypto market by tracking the Nasdaq Crypto Index. The U.S. Securities and Exchange Commission approved the NCIQ ETF in December last year, allowing it to begin trading on Nasdaq with exposure limited to Bitcoin and Ethereum.
Earlier this year, Hashdex — the asset management firm behind the NCIQ ETF — achieved a major milestone by receiving approval from Brazil’s securities regulator to launch the world’s first XRP spot ETF, the Hashdex Nasdaq XRP Index Fund, which will be listed on the B3 stock exchange.
