The US Securities and Exchange Commission (SEC) has taken a major step toward expanding regulated crypto investment options, granting initial approval to Bitwise Asset Management’s exchange-traded fund (ETF) that tracks the price of Bitcoin and Ethereum.

The ETF, which will be listed on NYSE Arca, aims to provide investors with exposure to both Bitcoin and Ethereum without the need to directly purchase or store the cryptocurrencies. Unlike futures-based products, the Bitwise ETF will hold actual Bitcoin and Ethereum, tracking their spot prices to offer a more direct investment option.

The SEC has historically been cautious about approving cryptocurrency ETFs, citing concerns over market manipulation and investor protection. However, this initial approval suggests a shifting regulatory landscape, one that acknowledges the increasing demand for crypto-based financial products.

According to the filing, the ETF will allocate its holdings based on the market capitalization of Bitcoin and Ethereum, meaning that the proportion of assets held by the fund will reflect the relative size of the two cryptocurrencies. As of the latest market calculations, Bitcoin holds approximately 83% of the fund's allocation, while Ethereum takes up the remaining 17%.

Industry experts view the approval as a bullish indicator for crypto ETFs in the U.S., especially considering that similar products have already gained traction in Europe and Canada. 

Bitwise is not alone in this space. The SEC had previously approved joint Bitcoin and Ethereum ETFs from Hashdex and Franklin Templeton in December, making this the third such ETF to receive regulatory clearance.