Brazil’s Hashdex Launches the First DeFi ETFs
Recent weeks have seen two companies compete to launch the first Brazilian exchange-traded funds for DeFi. In the last year or so, the popularity of crypto ETFs in Brazil has skyrocketed, with Hashdex and QR Capital leading the charge.
Launching the First DeFi ETF
In January, Hashdex, a crypto asset manager with offices in Menlo Park, California, and Rio de Janeiro announced a DeFi ETF on Brazil’s B3 stock exchange. The firm expected the fund to be listed on the Brazilian stock exchange, B3, on Feb. 17.
“We are confident that DeFi, through its innovative and disruptive technology, will exponentially grow and play a vital role in the financial sector of the future,” Hashdex CEO Marcelo Sampaio said in a statement.
This ETF “mirrors” the CF DeFi Composite Index. Notably, as of January, it tracked 12 digital assets spanning across dApps, service protocols, and settlement networks. Within DeFi, similar index products exist, with the largest based on market capitalization being the DeFi Pulse Index (DPI), which includes Uniswap, Aave, and Maker among its top 3 holdings.
Hashdex stated that the DeFi ETF has attracted 2,200 verified investors and raised $10.5 million in a recent release. This figure, however, only represented 10% of the firm’s initial estimates, according to Brazil’s InfoMoney financial newspaper. Hashdex manages assets worth more than $1 billion.
Rio de Janeiro’s QDFI11 Launched Earlier
Hashdex was the first to announce the launch of a DeFi ETF. However, QR Capital, Rio de Janeiro, a financial services company, listed its own on Feb. 8 on B3. The Bloomberg Galaxy DeFi Index, which covers nine assets, is referenced by the ETF known as QDFI11.
QR also has a bitcoin ETF and an ether ETF listed on B3 in addition to QDFI11.
“Bitcoin and Ethereum ETFs were just the entrance to a much richer and more diverse investment universe,” QR Capital CEO Fernando Carvalho said in a statement.
On the QDFI page, the net assets amount to approximately $7.4 million. On the other hand, about $145.2 million in assets are managed by QR Asset Management.
Hashdex is Making Milestones on Digital Assets
In February 2021, Hashdex released the world’s first crypto ETF, the Hashdex Nasdaq Crypto Index ETF. The fund is available to accredit non-US investors and trades on the Bermuda Stock Exchange (BSX).
In addition, the company has an exclusive collaboration with Victory Capital, an asset manager with $162 billion in assets under management as of Oct. 31, to offer cryptocurrency products to the United States. The first product of the Victory Hashdex Nasdaq Crypto Index Fund is a private fund only available to accredited investors.
U.S. is Still Adamant on Approving ETFs
Brazil-based QR Asset Management launched the first bitcoin ETF in Latin America last June and is planning more crypto ETF launches soon. ETFs that invest directly in crypto assets in Canada and parts of Europe are also traded. However, American regulators have not yet approved them.
Brazil’s financial markets are younger and less established than those of the United States. Brazilians have typically invested in high-interest State-issued bonds, which provide high yields with little risk. However, this is changing with a considerable fall in interest rates, and the transfer to alternative assets is apparent.
Former SEC regulator and blockchain strategy consultant Annemarie Tierney observed the absurdity of a Brazilian ETF storing digital assets with US custodians. Despite several attempts, the SEC has failed to authorize a national stock exchange listing for a crypto ETF.
She claims that the rising regulatory acceptability of publicly listed crypto ETFs in other countries emphasizes the competitive disadvantage that issuers face when launching a similar product in the US public markets.
As time goes on and these products show to be secure and popular, the SEC will be more comfortable with ETFs and other crypto-related financial products.
