Ben Strack

One of the SEC’s next <a href="https://blockworks.co/news/sec-grayscale-solana-etf">crypto ETF rulings</a> could prove a milestone for investors seeking to diversify their exposure within the segment.



Hashdex CIO Samir Kerbage pointed to the expected SEC decision in July that could allow <a href="https://blockworks.co/news/crypto-etf-filing-optimism-bloomberg">crypto index products</a> to expand the assets they hold.



The Hashdex Nasdaq Crypto Index US ETF (NCIQ), which launched in February, holds both BTC and ETH. Kerbage noted the holdings in that ETFs are “designed to evolve as the market evolves” — referring in part to regulatory developments.



The Brazil-based firm in March sought approval for NCIQ to invest in other assets that the international version of that index <a href="https://www.sec.gov/Archives/edgar/data/2031069/000121390025024262/ea0209567-11.htm#T9912">invests</a> in, such as solana (SOL). Other assets include XRP, cardano (ADA), chainlink (LINK), avalanche (AVA), litecoin (LTC) and uniswap (UNI). 



<a href="https://blockworks.co/news/trump-media-etf-cryptodotcom">Kerbage told me previously</a> Hashdex ultimately wants to create “the Nasdaq 100 for crypto.”



Grayscale filed last November to uplist its Digital Large Cap Fund — holding BTC, ETH, SOL, XRP and AVA at the time — to an ETF. The SEC’s final deadline to rule on that proposal is July 2. Clarity on that specific offering could extend to products by Hashdex, Bitwise and others.&nbsp;



Scott Johnsson, a general partner at Van Buren Capital, is indeed watching that date. He said in an April X post that because the index products have more undefined allocations, the SEC could adopt a general rule (rather than “case-by-case” rules for the proposed single-asset crypto ETPs).



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Most interesting part of upcoming crypto ETF season is going to be the index products. Broader implications for the space and set the tone for what comes next. This is really the event to be watching. (1) They&#39;re first on deck. July 2 is the final deadline for Grayscale Digital…&mdash; Scott Johnsson (@SGJohnsson) <a href="https://twitter.com/SGJohnsson/status/1915619368156762388?ref_src=twsrc%5Etfw">April 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“How they address the security question for each of the non-BTC/ETH allocations will draw the most attention,” Johnsson added.



Kerbage told Blockworks he expects to see the SEC allow US products to hold assets beyond BTC and ETH before approving more single-asset crypto ETFs.&nbsp;&nbsp;



“But this is the big question,” he noted. “If they’re not comfortable with having one specific single asset as an ETP, they still might allow an index to have a small allocation to that specific asset.”



Keep reading for more excerpts from Blockworks’ Q&amp;A with Kerbage.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: You mentioned in March that Hashdex was about to meet with the SEC. What did you discuss, and how do you expect the agency to proceed with the proposed crypto ETPs in front of them?



Kerbage: Our goal was to share the experience we’ve had outside of the US…and what we’ve seen working and not working. We think the SEC could approach this space by setting up a listing standard that will give more predictability.  



So instead of having more than 100 ETF applications and everyone trying to figure out what the SEC is trying to approve…just set out the rules and we [won’t] need to guess.



We think the SEC has everything they need to make their own decision. They don’t necessarily need to change legislation. Some other aspects are more complicated, like broker-dealer rules, the market structure, what is a security and what is not — so there’s a lot of complicated stuff around crypto. But I think clarity on the ETF side is within the SEC’s current mandate.



Blockworks: How do you view the demand for crypto index ETFs versus existing and future single-asset crypto products? Kerbage: We think that crypto is way bigger than just bitcoin. But we think, at least for traditional investors, it’s too risky to try to pick the winners…especially advisers and financial professionals.



They’re looking for a small allocation in their portfolio — like 1% to 5%. If eventually they’re in a situation [where] they need to decide between bitcoin, ether, solana, XRP, litecoin, all these different assets, it’s just too complicated for a 1% position. So that’s why it just makes sense to go diversified and have an index approach. This is what they do in all the different asset classes. When they decide to invest in emerging markets, they don’t go out to Brazil or South Africa trying to pick out specific stocks. They just buy an emerging market index. We think they should be looking at crypto assets the same. 



Blockworks: Hashdex also offers a US ETF that only invests in bitcoin. Are investors still interested in that one now that you have the BTC/ETH option?&nbsp; Kerbage: I would say 90% of the conversations we have are around indexes.&nbsp;



If you want to buy bitcoin, that’s fine, we have a bitcoin product and there [are] a lot of different bitcoin ETFs out there. But when you’re investing only in bitcoin, you’re making a decision to short the crypto market.&nbsp;



The biggest opportunity we see right now is getting exposure to the space with the optionality that crypto is bigger than just bitcoin.



Blockworks: How much more interest do you see from clients in a product like NCIQ when BTC and ETH prices are up, versus when they’re down? Kerbage: Most of the advisers understand that this asset class is here to stay and they need to have a strategy around it. So they’re all looking at the space and studying it.



Of course, as we have positive price action, it helps. Because they have more questions from clients, and as they have more questions from clients, they’re more inclined to take action.



Blockworks: How might the latest vote against the stablecoin-focused <a href="https://blockworks.co/news/waters-crypto-congress-block-hearing-trump">GENIUS Act</a> impact broader crypto regulatory progress and the timeline for more crypto ETF approvals?    



Kerbage: It’s hard to talk about the timeline. In the executive branch, there’s definitely a strong guidance towards giving clarity to the industry and doing this fast.



So you can have some discussion in Congress, with Democrats fighting back, and they might argue [President Donald] Trump getting involved in crypto and building his own crypto business is controversial.



But even with the chairman of the SEC [speaking] publicly about this, this is one of the priorities of his administration…to give clarity to this industry.



This interview was edited for clarity and brevity.



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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ETFs

Crypto indexes offer ‘biggest opportunity’ as SEC decision looms: Hashdex CIO

The future of crypto indexes involves a range of products delving into the segment’s many sub-sectors, according to an industry executive, though it will take time to get there.&nbsp;



Product development in the space is a continuous balance between fulfilling client demand and looking ahead toward more innovative offerings, according to Martin Leinweber, a digital asset product strategist at MarketVector Indexes.



The Germany-based company is an independent affiliate of US-based investment manager VanEck. Financial products based on MarketVector indexes have roughly $26 billion in assets under management.



Rather than traditional asset allocators, pension funds or banks, the company’s clients mainly comprise exchanges and smaller asset managers focused on the crypto space.&nbsp;&nbsp;



Coinbase uses the company’s bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) and ether (<a href="https://blockworks.co/price/eth">ETH</a>) indexes for the exchange’s nano bitcoin and ether futures products. MarketVector last week partnered with Digital Asset Research, a move Leinweber said diversifies its data set.



Of all its crypto <a href="https://www.marketvector.com/indices/digital-assets">products</a>, clients still clammer most for the single-token offerings focused on bitcoin and ether. Multi-token basket offerings, such as those that group together the top five or 10 tokens by market capitalization, have more recently started to gain traction after several years on the market.



“I’m happy that we see demand increasing for these baskets, because that’s a sign for me that we get to the next phase, then to the sectors and then to other products,” Leinweber told Blockworks in an interview.&nbsp;



Sector-focused products that seek to get investors exposure to smart contracts, for example — or to tokens tied to the metaverse, centralized exchanges or other more niche areas — is likely the next phase of index products, he added.&nbsp;



Aside from smart contracts, Leinweber said, many of the sub-sectors within DeFi and other areas of crypto capture markets that are currently too small and illiquid to be “investable.” Adoption of such indexes might not gain traction until the next bull market, he noted.



“I think it’s far away if you think of the end user — the normal retailer, not the crypto degen trader,” Leinweber explained. “I’d like to have it [move] faster, but nevertheless we do some new things and put it on our virtual shelf, just to showcase what we can do.&nbsp;



Keep reading for more excerpts from Blockworks’ interview with Leinweber.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: You mention giving clients what they want while also innovating. How do you balance that?



Leinweber: You have to anticipate, but you can’t be two or three years in advance. We did some fancy weightings in the past and nobody looked at it…so it’s a trade-off between client demand and showing what you can do.



It’s similar to a car. If it’s too futuristic or doesn’t fit the mainstream demand then it’s not a success. It should be visionary, but not too much.



Blockworks: The EU Parliament greenlit the <a href="https://blockworks.co/news/eu-parliament-passes-mica-vote">Markets in Crypto Assets (MiCA) regulation</a> last month. How do you view that development?&nbsp;



Leinweber: Now with MiCA, you just need one license from one country and you can sell it — in the future, due to passporting — in all of Europe within the EU, which is a big advantage.



Read more: <a href="https://blockworks.co/news/mica-could-get-crypto-banked">EU’s MiCA Framework Could Help Crypto Firms Get Banked</a>



You know what a digital asset is. You don’t know what it is in the US; that’s a big difference. You know what a utility token is. You also have the e-securities — the tokenized equities, tokenized bonds and tokenized funds.



You know what licenses you need for doing a specific business, being an exchange or a custodian, so it’s all regulated.&nbsp;



It’s not perfect — NFTs are excluded and DeFi isn’t regulated — but at least it’s not prohibitive. This alone will be a big push for Europe.&nbsp;



We missed Web2 in Europe, and I’m very forward-looking and enthusiastic when it comes to Web3 in Europe.



Blockworks: How could MiCA impact MarketVector in terms of potential greater index adoption by traditional players?



Leinweber: We’re still so early. It’s still such a retail-driven market and when I talk to clients or am at conferences, the big traditional asset managers still have a hard time accepting crypto.&nbsp;



I think it’s still a lack of education, but my hope is that with MiCA in place, you just need one large entity to start and others will follow.



Read more: <a href="https://blockworks.co/news/galaxy-europe-etp-push">Galaxy Links Up With $821B Asset Manager as Part of Europe ETP Push</a>



My impression is everyone’s waiting for the other to be first and then it can be very quick. It’s like a hockey stick: a long time you have nothing and then suddenly it’s exponential, and that’s something I expect with MiCA.



Blockworks: What do you make of the crypto regulatory environment in the US?&nbsp;



Leinweber: I’d love to have the US on board, because it’s one of the largest capital markets and would be a big push for adoption and for price if you just think of Metcalfe’s Law and network effects.



From my impression, the US is two years behind, at least.&nbsp;



I don’t see <a href="https://blockworks.co/news/crypto-chaos-dims-prospects-of-us-bitcoin-etf-analysts">a spot bitcoin ETF</a> anytime soon, unless you get such <a href="https://blockworks.co/news/grayscale-appears-to-win-opening-sec">[court] decisions</a> where the SEC is forced by law. But otherwise, just from a political and regulatory perspective, who is responsible for what? That’s still the problem.



Ethereum is a security and Ethereum is a commodity. <a href="https://blockworks.co/news/regulatory-clarity-ethereum-gensler">Ethereum is both, depending on who you ask</a>.



Then you have the Democrats fighting the Republicans. It takes a lot of energy to find a consensus there.



This interview was edited for brevity and clarity.



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index funds

Crypto Indexes Will Evolve, but Next-phase Adoption Could Be Far Off

Castle Funds is seeking to fill a gap in the insurance dedicated funds (IDF) space by launching an index fund for investment advisors and insurance professionals that want to allocate client money to crypto.&nbsp;&nbsp;



The California-based digital asset fund manager’s new Castle Digital Index Fund offers exposure to bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>), ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) and other cryptocurrencies available within an IDF.



IDFs are generally only open for direct investment by insurance carriers. Individuals are typically able to invest in the IDFs through private placement life insurance or <a href="https://www.investor.gov/introduction-investing/investing-basics/investment-products/insurance-products/variable-annuities#What_Is" target="_blank" rel="noreferrer noopener">variable annuity</a> policies they purchase from insurance carriers.



The investment <a href="https://www.castlefunds.com/#Intro" target="_blank" rel="noreferrer noopener">firm</a> partnered with a multinational life insurance carrier, though declined to name which one. The carrier has added Castle’s IDF to its menu of public-market, liquid and illiquid alternatives investment options for policyholders seeking to invest their insurance premiums, a spokesperson told Blockworks



“We’re trying to focus their attention on the crypto aspect of it and make the other aspects of the ownership experience feel as much like a traditional institutional investment product as possible,” Castle Funds Director <a href="https://www.castlefunds.com/team/dan-hoover" target="_blank" rel="noreferrer noopener">Dan Hoover</a> told Blockworks.



In addition to BTC and ETH, Hoover said the fund, set to rebalance monthly, could initially hold cryptocurrencies such as cardano (<a href="https://blockworks.co/price/ada" target="_blank" rel="noreferrer noopener">ADA</a>), dogecoin (<a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">DOGE</a>), polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>), solana (<a href="https://blockworks.co/price/sol" target="_blank" rel="noreferrer noopener">SOL</a>) and polkadot (<a href="https://blockworks.co/price/dot" target="_blank" rel="noreferrer noopener">DOT</a>).



The weighting of any single asset in the portfolio, which excludes stablecoins, is capped at 35%.



Castle Funds has managed private funds invested in digital assets since 2017.&nbsp;



But Hoover said the firm saw demand from investors wanting a more tax-efficient way to buy crypto indexes, adding he believes insurance dedicated funds present “one of the largest growth areas” in the insurance space.



Investors pay taxes related to gains on the invested premiums when they make withdrawals from the annuity.



“People that are entering into these variable annuity or variable universal life products can come in and say OK, I have a suite of alternative investment options in here … but I need a diversifier,” Hoover said. “So we felt there was a gap in the market for something that was liquid, that had monthly redemptions.”



<h3 class="wp-block-heading">Crypto gains another access point </h3>



Castle Funds President Peter Eberle said in a statement the firm has focused on crypto investment strategies that work with existing financial vehicles, such as self-directed individual retirement accounts (IRAs).



“The IDF is an additional access path for investors who are seeking tax- and cost-efficient ways to access these markets, and their portfolio diversification benefits, over a longer term,” he added.



Castle Funds’ existing hedge fund products are accepted by major self-directed IRA custodians, such as Millennium Trust, Entrust Group and Pacific Premier Trust as qualified investments for their self-directed IRA plans.



The company, however, has no plans to offer a fund for such plans that tracks the same index as the Castle Digital Index Fund.&nbsp;



While self-directed IRAs remain a compelling way to defer taxes on tax-inefficient investments like crypto, Hoover said, the Castle Funds director expects 401(k)s, for example, to remain closed to crypto for the time being.



Crypto exposure in IRAs has been a <a href="https://www.wsj.com/articles/investors-who-bet-on-bitcoin-fund-in-retirement-accounts-pay-the-price-11675049243" target="_blank" rel="noreferrer noopener">touchy</a> subject due to Grayscale Bitcoin Trust’s <a href="https://blockworks.co/news/asset-managers-potential-gbtc-takeover" target="_blank" rel="noreferrer noopener">underperformance</a>, as well as <a href="https://blockworks.co/news/ontario-teachers-fund-sank-95m-in-failed-ftx-empire" target="_blank" rel="noreferrer noopener">write-offs</a> by pension funds invested in failed crypto firms <a href="https://www.ft.com/content/67048159-82aa-4e96-bfb3-f1764f632375" target="_blank" rel="noreferrer noopener">Celsius</a> and FTX.



The Department of Labor said in <a href="https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/compliance-assistance-releases/2022-01" target="_blank" rel="noreferrer noopener">March 2022 guidelines</a> the Employee Benefits Security Administration (EBSA) expects to investigate plans that offer participant investments in cryptocurrencies and related products. 



“This expectation has chilled interest by plan sponsors and fiduciaries in direct cryptocurrency investments for now,” Hoover added.&nbsp;



Similar to the crypto within the retirement arena, the executive said, such exposure in the insurance space is still in its infancy.



The Castle Digital Index Fund is private and limited to insurance companies and qualified purchasers — generally a person holding an investment portfolio with a value of $5 million or more.



“This is the first step,” Hoover said. “The real killer in the variable annuity space is getting through to retail.”



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Department of Labor

Castle Funds Seeks To Fill Gap in Insurance With Crypto Exposure

<div id="highlights-block_636104b15b0fa" class="highlights">
 <ul>
 <li>Bitwise&#8217;s active strategy team will aim to capitalize on market inefficiencies for its investors</li>
 <li>The firm launched the first-ever cryptocurrency index fund back in 2017</li>
 </ul>
 
</div>



Bitwise Asset Management — a firm known for its crypto index funds — is moving into active strategies, the firm revealed Tuesday, as executives cited growing institutional demand for such offerings.&nbsp;



<a href="https://www.linkedin.com/in/jpark1127/" target="_blank" rel="noreferrer noopener">Jeffrey Park</a>, who joined Bitwise in February, is set to lead the new unit, a spokesperson told Blockworks. Park was a partner focused on research and portfolio management at alternative asset management firm Corbin Capital Partners, where he worked for the last decade.&nbsp;



“A new dimension of opportunity presents itself now as the market structure of liquid crypto has matured,&#8221; Park said in a statement. &#8220;We believe market-neutral, yield, arbitrage, and quantitative strategies can be combined with top-tier long-oriented approaches to create unique absolute return opportunities.”



<a href="https://www.linkedin.com/in/vincent-molino/" target="_blank" rel="noreferrer noopener">Vincent Molino</a>, who has led and supported due diligence efforts at Northern Trust, Mercer and EnTrustPermal, is set to head operational due diligence for Bitwise’s active solutions after joining the company in May.&nbsp;



<a href="https://www.linkedin.com/in/denyven/" target="_blank" rel="noreferrer noopener">Denny Peng</a> joins Park and Molino as a risk manager. Peng was at multi-strategy hedge fund complex Millennium Management before joining Bitwise in September.



The new team will first focus on multi-strategy absolute return solutions that seek to capitalize on market inefficiencies while offering low volatility. Bitwise hasn&#8217;t explicitly announced the launch of any actively managed funds that would be tradable on public markets just yet.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg" alt="" class="wp-image-36470" width="280" height="224" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=326 326w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=274 274w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/Jeff-Park-1-BW-1024x819.jpg?w=50 50w" sizes="auto, (max-width: 280px) 100vw, 280px" /><figcaption>Jeffrey Park, head of Bitwise&#8217;s new actively managed team | Source: Bitwise</figcaption></figure></div>


Still, its foray into active strategies for institutions represents a twist on the indexes Bitwise has become known for. Its <a href="https://bitwiseinvestments.com/crypto-funds/bitw" target="_blank" rel="noreferrer noopener">Bitwise 10 Crypto Index Fund</a> (BITW), which launched in 2017, was the first index fund of its kind. Bitwise adjusts the fund monthly based metrics such as liquidity, regulatory status and security. 



Bitcoin and ether currently make up 61% and 30% of the fund, respectively, followed by much smaller weightings of cardano, solana, polygon and polkadot, among others. BITW&#8217;s net asset value has doubled since its launch, but its share price has fallen about 60% since it started trading in December 2020. 



Overall, the company managed $1.3 billion in assets at the end of 2021 across strategies offering exposure to blue-chip cryptoassets as well as DeFi and NFTs. More recently, it partnered with <a href="https://cms.blockworks.co/tag/multicoin-capital/" target="_blank" rel="noreferrer noopener">Multicoin Capital</a> and venture capitalist Matthew Ball <a href="https://cms.blockworks.co/bitwise-multicoin-capital-spin-up-metaverse-index-and-fund/" target="_blank" rel="noreferrer noopener">to create a metaverse-focused index fund</a> in June. It <a href="https://cms.blockworks.co/bitwise-offers-new-web3-etf-as-some-crypto-funds-rebound/" target="_blank" rel="noreferrer noopener">launched a Web3 ETF</a> last month made up of public companies with Web3 exposure, such as Coinbase and Roblox. 



Those funds are currently down around 16% and 5% since their inceptions, respectively.



Bitwise Chief Investment Officer Matt Hougan said in a statement that crypto has historically moved in four-year cycles — with three years of rising prices and one year of drawdowns.&nbsp;



&#8220;Amid this cycle&#8217;s consolidation, many investors have quietly been doing their work and now perceive opportunity,” Hougan added. “We see higher-quality and stronger tailwinds than ever before. We’re excited to add active strategies alongside our broad suite of index-based strategies to enable investors to access the opportunities in crypto.&#8221;



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