10-Q: Hashdex Crypto ETF Q2 2025: Assets Surge, Index Expansion Delayed

Hashdex Nasdaq Crypto Index US ETF reports significant asset growth and positive returns in Q2 2025, despite regulatory delays for its expanded index strategy.

Summary

• Net assets increased to $125,608,529 as of June 30, 2025, from $88,730,642 as of March 31, 2025.
• The Trust recorded a net increase from operations of $27,878,414 for the three months ended June 30, 2025.
• Since inception (January 21, 2025) through June 30, 2025, the net increase from operations was $23,925,350.
• Net increase from capital share transactions was $8,999,473 for Q2 2025 and $101,683,179 since inception.
• Net Asset Value (NAV) per Share increased from $20.88 at the beginning of Q2 to $27.37 as of June 30, 2025.
• Total Return at NAV for the three months ended June 30, 2025, was 31.08%, and 9.48% since inception.
• The Nasdaq Crypto US Settlement Price Index (NCIUS) was reconstituted on June 2, 2025, to include Cardano (ADA), Solana (SOL), Stellar Lumens (XLM), and XRP Ledger (XRP), in addition to Bitcoin (BTC) and Ethereum (ETH).
• The Trust is currently restricted to holding only BTC and ETH due to its approved listing rule, using a sampling methodology to align with the updated index weights.
• The SEC issued an order on June 4, 2025, instituting proceedings to determine whether to approve or disapprove Nasdaq's proposed rule change for the expanded index.
• The management fee is temporarily reduced to 0.25% per annum through December 31, 2025, reverting to 0.50% thereafter.
• Bruno Leonardo Kmita de Oliveira Passos resigned as Director, Principal Financial Officer, and Principal Accounting Officer on June 2, 2025, and Samir Elias Hachem Kerbage was appointed to these roles on the same date.

Sentiment

Score: 7

Explanation: The Trust demonstrated strong financial performance in Q2 2025 with significant asset growth and positive returns driven by crypto asset appreciation, effectively recovering from an operational decrease in the earlier part of the year. However, regulatory delays in expanding its investment strategy to include additional digital assets temper the overall positive sentiment.

Positives

• Net assets grew significantly to $125,608,529 as of June 30, 2025, from $88,730,642 at March 31, 2025.
• Strong net increase from operations of $27,878,414 for the three months ended June 30, 2025.
• NAV per Share increased to $27.37, reflecting appreciation in crypto asset prices.
• Total Return at Net Asset Value was 31.08% for the quarter, indicating robust performance.
• The management fee is temporarily reduced to 0.25% per annum through December 31, 2025, benefiting investors.
• The underlying index (NCIUS) has expanded to include four additional digital assets (ADA, SOL, XLM, XRP), signaling potential for broader market exposure once regulatory hurdles are cleared.

Negatives

• Net investment loss of $(67,403) for the three months ended June 30, 2025, and $(79,081) since inception.
• Net realized loss of $(2,687) for the three months ended June 30, 2025, and $(198,589) since inception.
• The Trust experienced a net decrease in net assets from operations of approximately $(3,953,064) during the period from January 21, 2025, to March 31, 2025.
• Regulatory approval for the proposed rule change to allow the Trust to hold the newly added index constituents (Cardano, Solana, Stellar Lumens, XRP) is still pending, with the SEC instituting proceedings for further analysis.
• The Trust is currently restricted from holding the newly added index constituents due to limitations of its currently approved listing rule.

Risks

• Substantially all of the Trust's assets are holdings of Bitcoin, creating a concentration risk associated with fluctuations in Bitcoin's price.
• A decline in the price of Bitcoin will have an adverse effect on the value of the Shares of the Trust.
• Factors such as negative perception of digital assets, lack of stability and standardized regulation, platform shutdowns, and loss of investor confidence can cause crypto asset price declines.
• Changes in laws or regulations, including those concerning taxes, made by governmental authorities or regulatory bodies, could adversely affect the Trust.
• The Trust's investment objective to track the Index means its performance is tied to the Index's movements, regardless of market direction, and it will not attempt to outperform the Index.
• The Trust is an emerging growth company and may not be required to comply with certain public company requirements, such as an auditor's attestation report on internal control over financial reporting.

Future Outlook

The Trust intends to passively track the Nasdaq Crypto US Settlement Price Index (NCIUSS). While the index has expanded to include Cardano, Solana, Stellar Lumens, and XRP, the Trust is currently restricted to holding only Bitcoin and Ether until regulatory approval for the proposed rule change is obtained. The management fee will revert to 0.50% per annum after December 31, 2025, from the current temporary 0.25%.

Management Comments

• The Trust is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act).
• The Trust intends to take advantage of the benefits of the extended transition period for complying with any new or revised financial accounting standards.
• In the opinion of management of the Sponsor of the Trust, all adjustments necessary to present fairly the financial position and results of operations for the periods presented have been made.
• Mr. Passos's resignation did not result from any disagreement with the Trust or the Sponsor on any matter relating to the Trust's operations, policies, or practices.
• The Sponsor will employ a passive investment strategy that is intended to track the changes in the Index regardless of whether the Index goes up or down, meaning that the Sponsor will not try to beat the Index.

Industry Context

The filing reflects the ongoing evolution of the crypto ETF market, with efforts to broaden exposure beyond Bitcoin and Ether to other major digital assets like Cardano, Solana, Stellar Lumens, and XRP. The SEC's institution of proceedings for the proposed rule change highlights the regulatory scrutiny and cautious approach towards expanding crypto investment products in the U.S. The temporary fee waiver is a competitive strategy in a growing market, aiming to attract and retain investors amidst increasing competition in the digital asset investment space.

Management Changes

Corporate Governance

Legal Proceedings

• Neither the Trust, Trust nor Sponsor are currently subject to any material legal proceedings, nor are any material legal proceedings threatened against Trust, Trust or Sponsor.

Related Party Transactions

• The Sponsor, Hashdex Asset Management Ltd., is considered a related party to the Trust.
• The Sponsor provided initial capital of $250,000 for the initial sale of 10,000 shares, which was subsequently redeemed on February 13, 2025.
• As of June 30, 2025, the Trust has a liability to the Sponsor of $24,634 for the June Management Fee.
• The Hashdex Nasdaq Crypto Index Fund (NCI), a fund managed by the Sponsor, holds 4,000,000 shares of the Trust.

Stakeholder Impact

• Shareholders: Experienced significant appreciation in NAV and total return in Q2 2025. Face risks related to crypto asset volatility and regulatory uncertainty regarding expanded index exposure. Benefit from temporary reduced management fees.
• Sponsor (Hashdex Asset Management Ltd.): Receives management fees (temporarily reduced). Bears initial costs and certain routine operational expenses. Manages the Trust's investment strategy and operations.
• Authorized Participants: Engage in creation and redemption of baskets, subject to adjusted cutoff times, facilitating liquidity.
• Regulators (SEC, Nasdaq): Involved in reviewing and approving proposed rule changes for expanded crypto asset listings, indicating ongoing oversight of the crypto ETF market and its evolution.

Next Steps

• Await SEC approval for the proposed rule change (Nasdaq Rule 5712) to allow the Trust to hold additional digital assets (Cardano, Solana, Stellar Lumens, XRP).
• The management fee will revert to the standard 0.50% per annum after December 31, 2025.
• The Index will be reconstituted and rebalanced quarterly, on the first Business Day in March, June, September, and December.

Key Dates

Recommendation

The Trust has demonstrated strong performance in Q2 2025 with significant asset growth and positive returns, driven by the appreciation of Bitcoin and Ether, which helped to offset an operational decrease in the first part of the year. The temporary reduction in management fees is also a positive. However, the ongoing regulatory uncertainty regarding the expansion of the index to include additional crypto assets (Cardano, Solana, Stellar Lumens, XRP) presents a notable headwind. While the long-term potential for broader crypto exposure is attractive, the current restriction to only BTC and ETH, coupled with the SEC's institution of proceedings, suggests a 'hold' position until there is clearer guidance on the Trust's ability to fully implement its expanded index strategy. Investors should monitor regulatory developments closely.

Keywords

Hashdex, NCIQ, Crypto ETF, Bitcoin, Ether, Nasdaq Crypto Index, Digital Assets, SEC Filing, Quarterly Report, Cryptocurrency, Investment Fund, Asset Management, Blockchain, ETF, Q2 2025