The landscape of cryptocurrency investment in the United States could be on the verge of a significant transformation. On June 7, 2025, Nasdaq filed a rule change application with the U.S. Securities and Exchange Commission (SEC) to expand its underlying crypto benchmark index—paving the way for broader digital asset inclusion in regulated financial products.
This strategic move centers around the Hashdex Nasdaq Crypto Index ETF (NCIQ), which currently tracks the Nasdaq Crypto US Settlement Price Index (NCIUS). Under the proposed update, NCIQ would instead follow the more comprehensive Nasdaq Crypto Index (NCI), increasing the number of eligible cryptocurrencies from two to nine. The four newly proposed additions are XRP, Solana (SOL), Cardano (ADA), and Stellar Lumens (XLM).
A Step Toward Diversified Crypto Exposure
Currently, the NCI index already includes nine major digital assets: Bitcoin (BTC), Ethereum (ETH), XRP, SOL, ADA, XLM, Litecoin (LTC), Chainlink (LINK), and Uniswap (UNI). However, due to existing SEC regulations, the NCIQ ETF is legally restricted to holding only BTC and ETH—despite tracking a much broader index.
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This limitation creates what market analysts call a tracking error—a divergence between the ETF’s performance and that of its intended benchmark. By aligning the ETF’s holdings with all components of the NCI, Nasdaq aims to reduce this discrepancy and offer investors a more accurate reflection of the overall crypto market.
If approved, this change would mark a pivotal moment in the evolution of crypto-based financial products in the U.S., signaling growing regulatory acceptance and institutional confidence in digital assets beyond just Bitcoin and Ethereum.
Why These Four Cryptocurrencies?
The inclusion of XRP, SOL, ADA, and XLM isn't arbitrary. Each represents a distinct segment of blockchain innovation and has demonstrated sustained market relevance:
- XRP (Ripple): Designed for fast, low-cost international payments, XRP has been adopted by numerous financial institutions globally. Despite ongoing legal scrutiny in the past, recent developments have strengthened its compliance posture.
- Solana (SOL): Known for high throughput and low transaction fees, Solana has become a leading platform for decentralized applications (dApps), NFTs, and DeFi protocols. Its robust ecosystem continues to attract developer interest.
- Cardano (ADA): Built on peer-reviewed research and a layered architecture, Cardano emphasizes sustainability, scalability, and security. It appeals to long-term investors seeking scientifically grounded blockchain solutions.
- Stellar Lumens (XLM): Focused on cross-border transactions and financial inclusion, Stellar enables seamless asset transfers across borders, often partnering with NGOs and payment providers in emerging markets.
Together, these assets enhance the index’s ability to capture diverse technological approaches and use cases within the crypto economy.
Regulatory Hurdles and Timeline
While the proposal signals progress, it is not yet guaranteed. The SEC must approve the rule change before the ETF can begin investing in the full suite of index components. According to regulatory filings, a final decision is expected no later than November 2, 2025.
This timeline places the outcome firmly within a period of heightened regulatory clarity efforts surrounding digital assets. Approval would not only benefit NCIQ but could also set a precedent for other crypto ETFs seeking broader diversification.
Market observers note that Nasdaq’s structured approach—leveraging transparent pricing mechanisms and established index methodologies—may increase the likelihood of SEC acceptance compared to more speculative product proposals.
Implications for Investors and the Crypto Market
Expanding ETF access to a wider range of cryptocurrencies could have far-reaching effects:
- Improved diversification: Investors gain exposure to alternative blockchains without managing multiple direct holdings.
- Enhanced liquidity: Increased institutional demand may boost trading volumes across included assets.
- Greater legitimacy: Regulatory approval of multi-asset crypto ETFs reinforces digital assets as a viable asset class.
Moreover, this development reflects a maturing market where indices are evolving from BTC-centric models to holistic representations of blockchain innovation.
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For retail investors, such ETFs offer a familiar vehicle—exchange-traded funds—to participate in crypto growth while benefiting from regulatory oversight and custodial security.
Frequently Asked Questions
Why can’t the ETF currently hold all index components?
Due to current SEC regulations, crypto ETFs in the U.S. are largely limited to Bitcoin and Ethereum—assets deemed less susceptible to manipulation and more transparent in valuation. Until formal guidance expands, funds cannot legally invest in other digital assets despite their inclusion in indices.
What is tracking error, and why does it matter?
Tracking error refers to the difference between an ETF’s performance and its benchmark index. When an ETF cannot hold all index constituents (like NCIQ today), its returns may deviate significantly from the index it aims to mirror—reducing effectiveness as an investment tool.
Will adding more cryptos make the ETF riskier?
Diversification generally reduces risk by spreading exposure across different assets. While individual altcoins may be more volatile than BTC or ETH, combining them within a regulated ETF structure helps mitigate unsystematic risk through professional management and transparency.
How might this affect the price of XRP, SOL, ADA, or XLM?
Inclusion in a regulated ETF often leads to increased demand from institutional investors. While short-term price spikes are possible, the long-term impact depends on sustained inflows and broader market conditions.
Is this the first multi-crypto ETF in the U.S.?
Not technically—the NCIQ already exists—but it would be among the first to fully reflect a diversified crypto index if permitted to invest in all nine components. Most current U.S. crypto ETFs remain focused solely on BTC or ETH.
What happens if the SEC rejects the proposal?
If rejected, NCIQ will continue tracking the expanded index while remaining restricted to BTC and ETH holdings. Hashdex and Nasdaq could revise and resubmit the application or pursue alternative structures.
The Road Ahead for Crypto Index Innovation
Nasdaq’s initiative underscores a growing trend: traditional finance embracing crypto not just as speculative assets but as foundational elements of modern portfolios. As regulatory frameworks evolve, we’re likely to see more sophisticated products emerge—blending compliance with innovation.
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This shift benefits everyone—from developers building real-world applications to investors seeking transparent exposure. Whether through ETFs, indices, or other structured instruments, the integration of digital assets into mainstream finance appears inevitable.
As of mid-2025, all eyes are on the SEC. The decision on Nasdaq’s proposal could very well define the next chapter in American crypto adoption.
Core Keywords: Nasdaq, SEC, crypto ETF, XRP, Solana, Cardano, Stellar Lumens, cryptocurrency index