Nasdaq has submitted a proposal to the Securities and Exchange Commission (SEC) for a groundbreaking exchange-traded fund (ETF) framework designed to expand access to digital assets while enhancing regulatory oversight. If approved, the proposed rule—Nasdaq Rule 5712—would allow the listing of funds holding multiple cryptocurrencies beyond Bitcoin and Ethereum, signaling a major shift in institutional engagement with digital assets.
Nasdaq filed a 131-page proposal with the SEC on February 18, 2025, seeking approval for the Hashdex Nasdaq Crypto Index US ETF (NCIQ). The fund would passively track a diversified mix of cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Chainlink (LINK), Litecoin (LTC), and Avalanche (AVAX). This marks a significant step toward broadening digital asset ETFs beyond single-asset structures.
The proposal mandates that at least 90% of the fund’s holdings originate from platforms that participate in the Intermarket Surveillance Group (ISG) or have direct surveillance-sharing agreements with Nasdaq. This requirement, akin to standards applied to commodity-based ETFs, is intended to mitigate market manipulation risks and enhance transparency.
Nasdaq’s filing follows the SEC’s approval of Bitcoin and Ethereum ETFs in early 2024, which were contingent on surveillance-sharing agreements with regulated futures exchanges. The new proposal extends this approach, arguing that the inclusion of multiple assets in a single fund significantly reduces the risk of price manipulation.
Regulatory Framework and Safeguardsna
The Hashdex Nasdaq Crypto Index US ETF introduces multiple layers of oversight. The ETF’s digital assets will be held by regulated custodians, including Coinbase Custody Trust Company and BitGo Trust Company, while U.S. Bank, N.A. will act as the fund’s cash custodian.
To maintain price accuracy, Nasdaq will employ an advanced pricing mechanism that updates the fund’s net asset value every 15 seconds using data from pre-approved trading platforms. This methodology incorporates algorithmic safeguards to filter out price outliers, reducing the impact of irregular market fluctuations.
The ETF’s creation and redemption process will operate on a cash-only basis, eliminating the need for direct cryptocurrency transfers and reducing counterparty risks. This structure aligns with the SEC’s prior guidance on reducing settlement complexities in digital asset investments.
Market and Political Implications
Nasdaq’s move comes at a time of shifting regulatory priorities. With the Biden administration’s crypto policies facing scrutiny and the Trump administration vowing to dismantle perceived barriers to digital asset growth, the industry anticipates a more favorable regulatory environment. Industry stakeholders see this as an opportunity to bring institutional-grade investment products to market, fostering broader adoption of cryptocurrencies within traditional financial markets.
The SEC’s decision on the proposal is expected to set a precedent for future multi-asset digital investment funds. If approved, Nasdaq’s framework could redefine how institutional investors gain exposure to cryptocurrencies, paving the way for further integration between digital assets and conventional finance.
