10-Q: Hashdex Crypto ETF Soars 23.57% in First Nine Months

Hashdex Nasdaq Crypto Index US ETF reports significant asset growth and positive returns in its inaugural nine months, expanding its crypto holdings and trading partnerships.

Summary

• The Hashdex Nasdaq Crypto Index US ETF (NCIQ) reported net assets of $153,538,950 as of September 30, 2025, growing from its inception on January 21, 2025.
• The Trust achieved a total return at Net Asset Value of 23.57% for the period from January 21, 2025, through September 30, 2025.
• For the three months ended September 30, 2025, net assets increased by $27,930,421, driven by a net increase from operations of $16,459,378 and capital share transactions of $11,471,043.
• The Net Asset Value per Share stood at $30.89 as of September 30, 2025, up from $25.00 at inception.
• The Trust's portfolio primarily consists of Bitcoin ($111,972,694, 72.93% of net assets) and Ether ($22,359,447, 14.56% of net assets), with additional holdings in XRP, Solana, Cardano, and Stellar.
• The Trust transitioned to rely on generic listing standards on September 25, 2025, allowing it to hold a broader range of crypto assets included in the Nasdaq Crypto US Settlement Price Index (NCIUSS).
• New trading counterparties were established with Cumberland DRW LLC (July 16, 2025), Flowdesk SAS (July 24, 2025), and Enigma Securities Limited (August 27, 2025) for over-the-counter crypto trading services.
• A custodial services agreement was entered into with Fidelity Digital Asset Services, LLC in June 2025, though services had not commenced as of September 30, 2025.
• The Trust also entered into a Master Infrastructure-as-a-Service Agreement with Coinbase Cloud Pte. Ltd. on October 7, 2025, to enable future staking activities.
• The Sponsor's management fee is temporarily reduced to 0.25% per annum through December 31, 2025, after which it will revert to the standard 0.50%.

Sentiment

Score: 7

Explanation: The Trust shows strong asset growth and positive returns in its initial operating period, coupled with strategic operational expansions. However, inherent high risks of crypto assets and a net investment loss due to expenses temper the overall sentiment.

Positives

• Significant net asset growth to $153,538,950 since inception on January 21, 2025.
• Strong total return at Net Asset Value of 23.57% since inception, reflecting appreciation in crypto asset prices.
• Successful creation of 4,970,000 net shares since inception, indicating investor interest and capital inflow.
• Expansion of crypto asset holdings to include Bitcoin, Ether, XRP, Solana, Cardano, and Stellar, diversifying exposure within the NCIUSS index.
• Strategic partnerships with multiple OTC trading counterparties (Cumberland, Flowdesk, Enigma) enhance liquidity and execution capabilities.
• Agreement with Fidelity Digital Asset Services and Coinbase Cloud for future custodial and staking services, respectively, indicates operational scaling and potential for additional revenue streams.
• Temporary reduction of the management fee to 0.25% per annum through December 31, 2025, benefits shareholders by lowering expenses.

Negatives

• The Trust incurred a net investment loss of $(90,149) for the three months ended September 30, 2025, and $(169,230) since inception, primarily due to management fees exceeding interest income.
• The Trust's assets are highly concentrated in Bitcoin (72.93%), exposing it to significant concentration risk from Bitcoin price fluctuations.
• No comparative financial statements are provided as it is the Trust's first fiscal year of operations, limiting historical performance analysis.

Risks

• Concentration risk due to the majority of assets being held in Bitcoin, making the Trust highly susceptible to Bitcoin price fluctuations.
• Negative perception of crypto assets, lack of stability, and absence of standardized regulation in crypto markets could adversely affect value.
• Digital asset platforms are vulnerable to fraud, business failure, security breaches, or government-mandated shutdowns, leading to potential loss of investor confidence.
• High degree of price variability and pronounced, swift price changes in Index Constituents, leading to potential for significant loss.
• The Trust is riskier than other exchange-traded products that do not directly hold crypto assets or related financial instruments.
• Changes to the Nasdaq Crypto US Settlement Price Index (NCIUSS) rules or administration could adversely affect the Trust's investment strategy.
• The Sponsor's discretion to exclude or limit the weighting of Index Constituents may cause deviations between the Trust's performance and the Index.
• Risks associated with electronic communication systems, including error, fraudulent activities, and security/privacy issues.
• Digital Assets are not legal tender, operate without central authority, are not backed by governments, and are not subject to FDIC or SIPC protections.
• Digital Assets are a highly speculative asset class with a limited history and high volatility, including extreme volatility.
• Potential for Digital Assets to be subject to Forks, 51% Attacks, or Replay Attacks.
• Regulatory actions or policies may limit the ability to exchange or utilize Digital Assets, and regulation is still developing.
• Decline in popularity, acceptance, or use of Digital Assets could impair their price and liquidity.
• The Custodian's insurance (if any) is for its own benefit and does not guarantee or insure the client.
• Uncertainty in the law regarding ownership, custody, and transfer of Digital Assets, posing risks of fraud and theft.
• The Custodian may freeze accounts or assets to comply with anti-money laundering (AML), OFAC, or other laws/regulations.
• Execution and settlement of trade orders are subject to available liquidity and market conditions, and the Custodian may cancel or reject orders.
• Supply of Digital Assets depends on third-party providers outside the Custodian's control.
• Insolvency of trading counterparties (e.g., Enigma) or third-party account providers could result in clients having unsecured debt claims.
• Client funds and cryptocurrency held by Enigma are not segregated, increasing risk of loss in case of insolvency.

Future Outlook

The Trust intends to commence staking activities with certain eligible crypto assets in the future, following the Master Infrastructure-as-a-Service Agreement with Coinbase Cloud Pte. Ltd. The Sponsor will announce when these activities begin. The management fee will revert to its standard 0.50% per annum after December 31, 2025.

Management Comments

• Management of the Sponsor believes all adjustments necessary to present fairly the financial position and results of operations for the reported periods have been made.
• The Sponsor employs a passive investment strategy intended to track the changes in the Index regardless of whether the Index goes up or down, without utilizing leverage.
• The Sponsor will disclose the current Index Constituents and their weighting on the Trust's website on an ongoing basis.

Industry Context

The Hashdex Nasdaq Crypto Index US ETF's performance and strategic moves reflect the growing institutional interest and regulatory evolution in the crypto asset market. Its expansion into a broader range of crypto assets and partnerships with multiple OTC trading desks and custodians positions it to capitalize on market liquidity and diversification trends. The move to generic listing standards aligns with broader industry efforts to offer more flexible and comprehensive crypto investment products, while the planned staking activities could provide additional yield in a competitive ETF landscape.

Comparison to Industry Standards

• The Trust's investment objective to track the Nasdaq Crypto US Settlement Price Index (NCIUSS) is a standard passive investment strategy for ETFs, similar to other index-tracking funds in traditional and emerging asset classes.
• The temporary management fee of 0.25% is competitive within the nascent crypto ETF market, comparable to or lower than some initial offerings from competitors, though it will increase to 0.50% after December 31, 2025.
• The diversification into multiple crypto assets (Bitcoin, Ether, XRP, Solana, Cardano, Stellar) aligns with broader market trends towards multi-asset crypto funds, moving beyond single-asset Bitcoin or Ethereum products.
• The engagement of multiple OTC trading counterparties (Cumberland, Flowdesk, Enigma) and custodians (Coinbase, BitGo, Fidelity) is a robust operational practice, aiming to enhance liquidity, security, and best execution, which is a critical standard for institutional-grade crypto products.

Corporate Governance

Legal Proceedings

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

Related Party Transactions

• The Sponsor, Hashdex Asset Management Ltd., is a related party to the Trust.
• The Trust has a liability to the Sponsor of $30,298 for the September Management Fee.
• The Hashdex Nasdaq Crypto Index Fund (NCI), a fund managed by the Sponsor, holds 4,000,000 shares of the Trust.
• The Sponsor pays all other routine operational, administrative, and ordinary expenses of the Trust, including up to $250,000 per annum in ordinary legal fees and expenses.

Stakeholder Impact

• Shareholders: Benefit from the Trust's positive returns and expanded crypto asset exposure, but are exposed to high crypto market volatility and concentration risk in Bitcoin. Will face a higher management fee after December 31, 2025.
• Sponsor (Hashdex Asset Management Ltd.): Receives management fees and is responsible for the Trust's operations and certain expenses. Benefits from the Trust's growth and expanded partnerships.
• Custodians (Coinbase Custody Trust Company, BitGo Trust Company, Fidelity Digital Asset Services): Provide secure storage for the Trust's crypto assets, generating revenue from their services.
• Trading Counterparties (Cumberland DRW LLC, Flowdesk SAS, Enigma Securities Limited): Engage in OTC trading services with the Trust, benefiting from transaction volumes.
• Employees: No direct impact mentioned, but the Trust's growth could indirectly support the Sponsor's workforce.

Next Steps

• Commence staking activities with eligible crypto assets via Coinbase Cloud Pte. Ltd. at a later announced date.
• The Sponsor's management fee will revert to 0.50% per annum after December 31, 2025.

Key Dates

Recommendation

The Hashdex Nasdaq Crypto Index US ETF has demonstrated strong performance since its inception, with significant asset growth and a 23.57% return. The expansion of its crypto holdings and strategic partnerships for trading and future staking activities are positive indicators for its operational robustness and potential for continued growth. However, the inherent high volatility and regulatory uncertainties of the crypto asset market, coupled with the Trust's concentration risk in Bitcoin and the upcoming increase in management fees, warrant a cautious approach. While the growth is compelling, the speculative nature of the underlying assets suggests that a 'hold' recommendation is appropriate for investors already exposed, allowing them to benefit from potential upside while acknowledging the substantial risks.

Keywords

Crypto ETF, Hashdex, Nasdaq Crypto Index, NCIQ, Bitcoin, Ethereum, Solana, XRP, Cardano, Stellar, Digital Assets, SEC Filing, 10-Q, Cryptocurrency, Asset Management, OTC Trading, Custody, Staking