10-K: Hashdex ETF Reports First Year Results, Index Shift

Hashdex Nasdaq CME Crypto Index ETF concludes its first fiscal year with $121.3 million in net assets, a 9.15% NAV decline, and a strategic index transition.

Summary

• The Hashdex Nasdaq CME Crypto Index ETF (NCIQ) completed its first fiscal year of operations on December 31, 2025, reporting total net assets of $121,287,477.
• The Trust's investment objective is to provide price exposure to its Index Constituents (crypto assets) by tracking the daily price changes of its reference index, minus operational expenses and liabilities.
• Effective January 20, 2026, the Trust transitioned its reference index from the Nasdaq Crypto US Settlement Price Index (NCIUSS) to the Nasdaq CME Crypto Settlement Price Index (NCIS), though both indices apply substantially identical methodologies and reflect the same constituents.
• As of December 31, 2025, the Index Constituents included Bitcoin (75.24%), Ether (13.67%), XRP (6.04%), Solana (3.69%), Cardano (0.68%), Stellar (0.28%), and Chainlink (0.40%).
• The Trust experienced a net decrease in net assets from operations of $(1,981,681) for the period from February 14, 2025, to December 31, 2025.
• The Net Asset Value (NAV) per Share decreased from $25.00 at inception to $22.71 at December 31, 2025, representing a total return at NAV of (9.15)%.
• The market price per Share at December 31, 2025, was $22.73, reflecting a total return at market value of (9.07)%, trading at a $0.02 premium to NAV.
• Net capital share transactions resulted in a net increase of $123,269,158, driven by the creation of 5,580,000 Shares ($129,294,147 proceeds) and the redemption of 240,000 Shares ($(6,058,792) payments).
• The Sponsor temporarily reduced its management fee to 0.25% per annum through December 31, 2026, and subsequently made this reduction permanent effective March 16, 2026. The Sponsor waived $255,727 in management fees during the period.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with a slightly negative sentiment due to the reported net decrease in assets from operations and the significant unrealized depreciation, reflecting the inherent volatility of crypto markets. While capital inflows were strong, the negative investment performance and NAV decline are concerning for initial investors, despite the positive operational adjustments like the fee reduction and index transition.

Positives

• The Trust successfully launched and commenced operations on February 14, 2025, attracting significant capital inflows totaling $123,269,158 in its inaugural year.
• The Sponsor voluntarily waived $255,727 of Management Fees during the period, effectively reducing the net expense ratio to 0.25% (annualized), which was later made a permanent reduction.
• The Trust maintains a diversified portfolio of seven crypto assets, providing broad exposure to a material portion of the overall crypto asset market.
• The Trust has established a robust network of service providers, including multiple Crypto Custodians (Coinbase Custody, BitGo, Fidelity Digital Asset Services) and Authorized Participants (Macquarie Capital, Virtu Americas, Cantor Fitzgerald & Co.).

Negatives

• The Trust recorded a net decrease in net assets resulting from operations of $(1,981,681) for its first fiscal year.
• A net investment loss of $(255,777) was reported, as the crypto assets held do not generate interest or dividends.
• The Trust experienced significant net unrealized depreciation of $(2,063,711) on its investment portfolio, primarily due to price corrections in major Index Constituents like Bitcoin and Ethereum during Q4 2025.
• The NAV per Share decreased by 9.15% from inception ($25.00) to December 31, 2025 ($22.71), indicating a negative investment return for shareholders during the period.

Risks

• **Concentration Risk**: The majority of the Trust's assets are held in Bitcoin (75.24% as of Dec 31, 2025), making its value highly susceptible to Bitcoin price fluctuations.
• **Market Illiquidity**: The Trust relies on a limited number of Authorized Participants for creation and redemption. If these institutions exit the business or are unable to process orders, Shares may trade at a discount to NAV, potentially leading to trading halts or delisting.
• **Operational Delays**: Crypto asset transactions on blockchain networks are susceptible to delays due to network outages, congestion, spikes in transaction fees, or other disruptions, which could delay Share creations and redemptions.
• **Cybersecurity Risks**: The Trust relies on the cybersecurity programs of its Sponsor and third-party service providers. While measures are in place, the inherent risks of the crypto asset markets mean there's no assurance these measures will be successful in preventing illicit financing or cyber incidents.
• **Conflicts of Interest**: Potential conflicts exist with the Prime Execution Agent (an affiliate of a Crypto Custodian) when executing trades, as it may prioritize its own interests or those of its affiliates, potentially affecting the price received by the Trust.
• **Regulatory Uncertainty**: The classification of digital assets as securities by the SEC remains undefined, which could impact the application of insider trading policies and other regulations.

Future Outlook

The Trust's future outlook includes a strategic transition of its underlying index to the Nasdaq CME Crypto Settlement Price Index (NCIS) effective January 20, 2026, which is expected to maintain substantially identical methodologies and constituents. The Sponsor has also permanently reduced the management fee to 0.25% per annum, aiming to enhance cost-efficiency for the Trust. The Trust may engage in staking activities for eligible crypto assets in the future, following the Master Infrastructure-as-a-Service Agreement with Coinbase Cloud Pte. Ltd. on October 7, 2025.

Management Comments

• The Trust's investment objective is to align the daily changes in the net asset value (NAV) of the Shares with the daily price changes of the Index, minus operational expenses and liabilities.
• The Sponsor will employ a passive investment strategy intended to track the changes in the Index, regardless of its direction, meaning that the Sponsor will not attempt to outperform the Index.
• The Sponsor has adopted and implemented policies and procedures that are reasonably designed to ensure compliance with applicable law, including a Code of Ethics providing guidance on conflicts of interest.
• Management concluded that the Trust's disclosure controls and procedures were effective as of December 31, 2025, to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported timely.

Industry Context

StockSavvy.ai notes that the Hashdex Nasdaq CME Crypto Index ETF's first annual report highlights the inherent volatility and evolving nature of the crypto asset market. The significant unrealized depreciation in Q4 2025, despite substantial capital inflows, underscores the speculative nature of digital assets like Bitcoin and Ethereum. The strategic shift to the Nasdaq CME Crypto Settlement Price Index and the permanent reduction of the management fee to 0.25% per annum are competitive moves in a rapidly expanding ETF landscape, aiming to attract and retain investors by aligning with recognized benchmarks and offering a lower cost structure. The detailed description of crypto assets and their underlying technologies reflects the increasing institutionalization of the sector, while the emphasis on robust custody and compliance frameworks addresses ongoing regulatory scrutiny and investor protection concerns. The ETF's passive strategy positions it as a direct competitor to other crypto-focused investment vehicles and direct crypto purchases, offering a regulated and accessible entry point to the market.

Comparison to Industry Standards

• The Trust's annualized net expense ratio of 0.25% is competitive within the nascent crypto ETF market, particularly following the permanent fee reduction, potentially positioning it favorably against higher-fee active or less diversified crypto funds.
• The diversified portfolio, including Bitcoin, Ether, XRP, Solana, Cardano, Chainlink, and Stellar, offers broader exposure compared to single-asset Bitcoin or Ethereum ETFs, aligning with a more comprehensive market index approach.
• The reliance on multiple reputable Crypto Custodians (Coinbase Custody, BitGo, Fidelity Digital Asset Services) for asset safekeeping aligns with best practices for institutional-grade digital asset custody, comparable to standards seen in other regulated crypto investment products.
• The passive investment strategy, aiming to track the Nasdaq CME Crypto Settlement Price Index, is a standard approach for index-based ETFs, similar to how traditional equity or commodity index funds operate, providing transparent and rules-based exposure without active management risk.

Management Changes

Corporate Governance

Legal Proceedings

• As of December 31, 2025, the Trust was not subject to any material legal proceedings, nor were any material legal proceedings threatened against the Trust or the Sponsor.

Related Party Transactions

• The Sponsor provided the initial seed creation of 10,000 Shares for $250,000 on January 21, 2025, which was redeemed on February 13, 2025.
• Hashdex Nasdaq Crypto Index Fund (NCI), an investment fund managed by the Sponsor, holds 4,000,000 shares of the Trust, representing 74.91% of outstanding shares as of December 31, 2025.
• Coinbase Ventures, an affiliate of Coinbase Custody Trust Company, LLC (one of the Crypto Custodians), has invested in an affiliate of the Sponsor, creating a potential appearance of a conflict of interest.
• The Prime Execution Agent, an affiliate of Coinbase Custody, may facilitate sales of the Trust's crypto assets, which could create potential conflicts of interest in trade execution.

Stakeholder Impact

• **Shareholders**: Experience direct price exposure to the Index Constituents, subject to market volatility and operational expenses. Their investment value is directly tied to the NAV, which saw a 9.15% decline in the first year. They have limited voting rights and rely on the Sponsor's management.
• **Authorized Participants**: Play a critical role in the creation and redemption of Baskets, ensuring market liquidity. Their continued participation is essential for the efficient functioning of the Trust's secondary market.
• **Sponsor (Hashdex Asset Management Ltd.)**: Benefits from management fees (now permanently 0.25% per annum) for its services. Bears most routine operational expenses and is responsible for the Trust's overall management and strategic direction. Faces potential conflicts of interest due to managing other funds and affiliate investments.
• **Service Providers (Custodians, Administrator, Transfer Agent, Marketing Agent)**: Receive fees for their specialized services, contributing to the Trust's operational expenses. Their performance and reliability are crucial for the Trust's smooth functioning and asset security.

Next Steps

• The Trust's Index will be reconstituted and rebalanced quarterly on the first Business Day in March, June, September, and December.
• The Trust may engage in staking activities with respect to certain eligible crypto assets, following the Master Infrastructure-as-a-Service Agreement with Coinbase Cloud Pte. Ltd. on October 7, 2025.
• The Sponsor will continue to oversee the Trust's operations and ensure compliance with regulatory requirements, including periodic reviews of cybersecurity practices and third-party service providers.

Key Dates

Recommendation

The Hashdex Nasdaq CME Crypto Index ETF's first annual report presents a mixed picture. While it successfully launched and attracted significant capital, the net decrease in assets from operations and the 9.15% NAV decline reflect the inherent volatility and recent downturn in the crypto market. The permanent reduction of the management fee is a positive step for long-term cost efficiency, and the index transition maintains a consistent strategy. However, the concentration risk in Bitcoin and reliance on a limited number of Authorized Participants for liquidity remain key considerations. For a seasoned investor, the ETF offers a regulated and diversified exposure to crypto assets, but the current market conditions and initial performance suggest a 'hold' position, awaiting clearer signs of sustained market recovery and the long-term impact of the fee reduction and index transition before making further commitments.

Keywords

Hashdex, Crypto ETF, Bitcoin, Ethereum, Digital Assets, SEC Filing, 10-K, Nasdaq, CME, NCIQ, Investment Fund, Blockchain, Asset Management, Financial Report, Cryptocurrency