- Chad Steingraber claimed that the Hashdex Nasdaq Crypto Index ETF would acquire 215,854 XRP tokens for every 1,000 new shares created, sparking discussions within the crypto community.
- Steingraber’s comments confused the existing Hashdex Nasdaq Crypto Index ETF with the upcoming Hashdex Nasdaq Crypto Index US ETF.
Chad Steingraber, a prominent voice in the crypto community, recently sparked discussions by claiming that the Hashdex Nasdaq Crypto Index ETF plans to acquire 215,854 XRP tokens for every 1,000 new shares created.
Steingraber’s statement, shared on X, delved into the latest developments surrounding crypto ETFs, particularly focusing on the ETF’s approach to XRP holdings. According to information available on Hashdex’s website, the ETF (HDEX.BH), tracking the Nasdaq Crypto Index (NCI), features a diversified portfolio of cryptocurrencies with varying allocations.
Bitcoin leads with 64.33%, followed by Ethereum at 26.08%, Solana at 5.26%, and XRP at 1.48%. This development comes at a time when the SEC is initiating the first steps towards a combined Bitcoin and Ethereum ETF from Hasdex, per the CNF report.
Currently, the ETF has 79,579 outstanding shares, each valued at a net asset value (NAV) of $7,008. With XRP priced at approximately $0.4714 per token, each share effectively holds about 215.85 XRP, totaling around $101.7 in value, accounting for 1.48% of the ETF’s total holdings.
Steingraber asserted that under the ETF’s model, the creation of 1,000 new shares would obligate the fund to purchase 215,854 XRP tokens, irrespective of the token’s market price at the time. He emphasized the ETF’s purported cash create mechanism, which mandates acquiring underlying assets from the market upon new share issuance.
Since these funds will be “Cash Creates” – that means when NEW shares are created, the fund uses the cash to buy the underlying assets from the market.
As an example, if 1,000 new shares are made – the fund would then be buying 215,854 XRP NO MATTER THE CURRENT PRICE 👍 https://t.co/wcIVNt19xt
— Chad Steingraber (@ChadSteingraber) July 1, 2024
Steingraber Misses A Clear Distinction
However, upon closer examination, it becomes evident that Steingraber may have overlooked a critical detail. The Hashdex Crypto Index ETF operates under an in-kind redemption model, not a cash-creation one. This distinction impacts how the ETF handles its asset allocations and market operations.
This means that, rather than buying additional XRP from the market to create new shares, the fund exchanges existing assets to generate these shares. This model helps maintain the fund’s balance without increasing market pressure by purchasing more XRP.
Notably, Steingraber’s comments confused the current Hashdex Nasdaq Crypto Index ETF with the upcoming Hashdex Nasdaq Crypto Index US ETF. The new US-based product, which the SEC recently acknowledged in its 19b-4 filing, follows a structure and regulatory framework different from the existing ETF.
For context, Hashdex launched the current Hashdex Nasdaq Crypto Index ETF in February 2021, trading on the Bermuda Stock Exchange. This product has been active since its launch, with a return rate of 66.97%. Over the past year, it has gained 93.60%.
The forthcoming Hashdex Nasdaq Crypto Index US ETF is expected to cater primarily to US citizens. While this fund uses a cash-creating redemption model, it will not hold XRP or any other assets besides Bitcoin and Ethereum.
Amid the current SEC vs. Ripple battle, the XRP price has stagnated below $0.50, per the CNF update. As of press time, XRP is trading 0.8% up at $0.4818 and has a market cap of $26.8 billion.
Earlier this week, on July 1, Ripple unlocked 1 billion XRP from escrow, leaving 1.3 billion XRP in its spendable wallets. This move has sparked rumors of a potential settlement in its ongoing dispute with the SEC, reported Crypto News Flash.
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