S-1/A: Hashdex Nasdaq Crypto Index US ETF Files for Cash Custody Agreement with U.S. Bank

Hashdex Nasdaq Crypto Index US ETF establishes a cash custody agreement with U.S. Bank National Association for safekeeping of fund assets.

Summary

• Hashdex Nasdaq Crypto Index US ETF has entered into a cash custody agreement with U.S. Bank National Association.
• U.S. Bank will act as the custodian for the Trust's cash assets.
• The agreement outlines definitions, appointment of the custodian, custody of cash and securities, purchase and sale of investments, and compensation.
• The Trust will pay the Custodian a base fee, portfolio transaction fees, and other expenses as outlined in Exhibit A.
• The agreement is effective as of the last date written on the signature page and will continue for three years, with automatic one-year renewals unless terminated.
• The Trust is responsible for maintaining an appropriate level of short term cash investments to accommodate cash outflows.
• The Trust may obtain a formal line of credit for potential overdrafts of its custody account.
• The Custodian shall exercise commercially reasonable efforts of care in the performance of its duties under this Agreement.
• The Trust shall indemnify the Custodian, any Sub-Custodian and any nominee thereof from and against any and all claims, demands, losses, expenses and liabilities of any and every nature.
• The Custodian shall indemnify and hold harmless the Trust from and against any and all claims, demands, losses, expenses, and liabilities of any and every nature.
• The agreement includes provisions for force majeure, proprietary and confidential information, and termination conditions.

Sentiment

Score: 7

Explanation: The document is a standard legal agreement, so the sentiment is neutral. However, the establishment of a custody agreement is a positive step for the ETF, indicating progress towards launch.

Positives

• The agreement establishes a clear framework for the custody of the Trust's cash assets.
• The indemnification clauses provide protection for both the Trust and the Custodian.
• The agreement includes provisions for business continuity and disaster recovery.

Negatives

• The Trust is responsible for maintaining an appropriate level of short term cash investments to accommodate cash outflows.
• The Custodian's liability is limited to direct damages arising from its failure to perform its obligations in accordance with the agreed standard of care.
• The Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required to indemnify the Trusts service providers under certain unusual or extraordinary circumstances.

Risks

• The Custodian's liability is limited to direct damages arising from its failure to perform its obligations in accordance with the agreed standard of care.
• The Trust may be required to indemnify the Sponsor, and the Trust and/or the Sponsor may be required to indemnify the Trusts service providers under certain unusual or extraordinary circumstances.
• The agreement includes provisions for force majeure, which could disrupt the Custodian's ability to perform its duties.

Future Outlook

The agreement will automatically renew for successive one (1) year terms unless either party provides written notice at least 60 days prior to the end of the then current term that it will not be renewing the Agreement.

Industry Context

This agreement is a standard practice for ETFs to ensure the safekeeping of fund assets. It aligns with industry norms for custody arrangements.

Comparison to Industry Standards

• Custody agreements are standard practice for ETFs and other investment funds.
• Comparable companies such as BlackRock, Grayscale, and Fidelity also utilize custody agreements with reputable financial institutions.
• The fees outlined in the agreement appear to be within the typical range for custody services in the ETF industry.
• The indemnification clauses are also standard in such agreements, providing protection for both the fund and the custodian.

Stakeholder Impact

• Shareholders benefit from the secure custody of the Trust's cash assets.
• The agreement provides clarity and transparency regarding the custody arrangements.
• The agreement helps to ensure the operational efficiency of the Trust.

Next Steps

• The Trust will continue to operate under the terms of the custody agreement.
• The Trust will monitor the performance of the Custodian and ensure compliance with the agreement.
• The Trust will evaluate the need for additional custodians or other service providers.

Key Dates

Keywords

custody agreement, cash, custodian, hashdex, trust, securities, fund