- Hashdex plans to add Cardano (ADA) and XRP to its cryptocurrency index ETF, pending SEC approval.
- The firm sets high standards and considers exchange listings, price volatility, security, and reputational risk before listing assets.
- Sanctioned listing of ADA and XRP would increase institutional exposure and adoption of these altcoins.
Hashdex, the Brazilian digital asset manager, hopes to grow its cryptocurrency index ETF to include other altcoins like XRP and Cardano (ADA). The firm has proposed to the U.S. Securities and Exchange Commission (SEC) adding these additional assets
Cryptocurrencies should fulfill certain requirements to qualify for inclusion in the index. They should be listed on major exchanges like Bitstamp, Coinbase, and Gemini, and have a free-floating price not pegged to any other asset.
Selection Criteria for Inclusion
In addition to these technical criteria, Hashdex also looks at other aspects prior to adding a cryptocurrency. The firm assesses reputational risks and security issues to guarantee the stability of its index. Besides, cryptocurrencies that fail to bring innovative use cases or new economic models will not be added.
Meme coins, which are typically driven by social trends instead of robust fundamentals, can also be excluded from the index.
Selection Criteria for Inclusion
Including XRP and ADA would make the ETF more diversified, which is currently being dominated by Ethereum and Bitcoin. As of March 17, Bitcoin holds an 88.3% of the ETF, and Ethereum holds 11.7%. Including altcoins in the index could help deliver investors exposure to a broader range of digital assets.
Hashdex’s expansion of its index is at a time when institutions are increasingly investing in cryptocurrency. The firm plans to provide diversified investment while adding only stable and reliable assets through the expansion of its index.The process of selecting highlights the emphasis on quality rather than quantity, with exclusion of very volatile tokens.
If approved, the addition of XRP and ADA would make them more visible to institutional investors. This may help contribute to greater adoption and trading activity for these coins. Hashdex’s move to adjust its index criteria and selectively choose assets reflects caution but a forward-thinking strategy to managing crypto investments.
Also Read : BREAKING: SEC drops Lawsuit Against Ripple as XRP Surges 10%
