Hashdex Nasdaq CME Crypto Index ETF (NCIQ) 2025 Annual Report: Key Investor Highlights

Overview

The Hashdex Nasdaq CME Crypto Index ETF (NCIQ), listed on The Nasdaq Stock Market LLC, has published its annual report for the fiscal year ending December 31, 2025. This report provides a comprehensive overview of the ETF’s operational and financial performance, investment strategy, and regulatory compliance. The ETF is managed by Hashdex Asset Management Ltd., with its registered business address in Rio de Janeiro, Brazil.

Key Points for Investors

• ETF Structure and Investment Objective: NCIQ offers investors exposure to a diversified basket of leading crypto assets, as defined by its underlying index, the Nasdaq Crypto Index (NCI). The ETF aims to track the performance of the NCI by holding the Index Constituents directly, thus reducing the complexities and operational risks of holding digital assets individually.
• Commencement and Growth: Operations began on February 14, 2025. By year-end, the ETF had sold 5,580,000 shares, raising \$129.3 million in gross proceeds. As of December 31, 2025, there were 5,340,000 shares outstanding, with net assets of \$121.3 million and a closing NAV per share of \$22.71.
• Performance: The ETF experienced a total return at NAV of -9.15% for the period from inception to year-end, with a decrease from \$25.00 per share at inception to \$22.71 at year-end. The ETF’s market price closely tracked its NAV, with a closing price of \$22.73. The portfolio recognized a net realized gain of \$337,807 but recorded a net unrealized depreciation of \$2.06 million, primarily due to market volatility in major constituents like Bitcoin and Ethereum.
• Expense Ratio and Waivers: The sponsor’s management fee was \$511,454, but half (\$255,727) was voluntarily waived, resulting in a net expense ratio of 0.25% (annualized) for 2025. This fee reduction may have supported performance relative to competitors.
• Liquidity and Redemptions: The ETF structure allows for the creation and redemption of share baskets (10,000 shares per basket) by authorized participants. Redemptions for the year totaled 240,000 shares. Market makers and authorized participants are critical to maintaining liquidity and preventing large premiums or discounts to NAV.
• Index Composition and Rebalancing: The ETF held seven index constituents as of December 31, 2025, with Bitcoin and Ethereum likely as major holdings. Index rebalancing occurs quarterly, based on free-float market capitalization. Only assets with robust trading, regulatory compliance, and institutional-grade pricing are included.
• Risk Factors: The report notes the ETF is classified as a “smaller reporting company” and an “emerging growth company” under SEC rules. It does not distribute cash or dividends; all income and gains are reinvested. The Trust has no off-balance sheet arrangements or material legal proceedings.
• Regulatory Compliance & Controls: The management asserts effective disclosure controls and internal controls over financial reporting as of year-end. No changes in internal controls were identified that could materially affect financial reporting.
• Forward-Looking Statements: The report includes the usual cautionary notes regarding forward-looking statements, highlighting risks related to market volatility, regulation, and crypto-specific risks such as illicit financing and liquidity constraints.

Price Sensitive and Shareholder-Relevant Information

• Expense Ratio Waiver: The sponsor’s voluntary reduction of the management fee from 0.50% to 0.25% for 2025 is potentially price sensitive, as it improves net returns to shareholders and may affect ETF competitiveness.
• Unrealized Depreciation: The ETF recorded a net unrealized loss of \$2.06 million for 2025, reflecting the significant volatility in crypto markets, especially in Bitcoin and Ethereum. This is important for investors to gauge the risk profile and future performance.
• Liquidity and Redemption Risks: The ETF’s reliance on a limited number of authorized participants presents a risk. If these participants exit, creation/redemption of shares could be impacted, potentially leading to trading at a discount or premium, trading halts, or delisting—directly affecting share value.
• Shareholder Rights: The ETF does not pay cash distributions, which may impact after-tax returns for investors who require liquidity from their investments.

Additional Details

• ETF Ticker: NCIQ
• Exchange: Nasdaq Stock Market LLC
• Public Float as of June 30, 2025: \$16,145,730.87
• Net Asset Value (NAV) and Share Price as of December 31, 2025: NAV \$22.71, Closing Price \$22.73
• Shares Outstanding: 5,340,000
• Net Assets: \$121,287,477
• Management’s Internal Control Assessment: No material weaknesses identified; no public accountant attestation required due to company size.
• Legal Proceedings: None material as of December 31, 2025.
• Redemption and Creation: 5,580,000 shares created; 240,000 redeemed.
• Trading Premium/Discount: The ETF traded at a premium to NAV on 77 trading days in 2025, at NAV on 7 days, and at a discount on 43 days, indicating generally tight tracking but with some variability due to market conditions.

Potential Share Price Movers

• Fee Reduction: The management fee waiver is a positive for shareholders and could increase demand for shares relative to competitors with higher expense ratios.
• Market Volatility: The reported losses and unrealized depreciation highlight the ETF’s sensitivity to crypto market swings, which could drive further NAV reductions or recoveries, directly impacting the per-share value.
• Liquidity Risks: Any future issues with authorized participants or market makers could materially affect trading liquidity and the ETF’s ability to maintain NAV alignment, a key risk for investors.

Conclusion

The Hashdex Nasdaq CME Crypto Index ETF’s first operational year was marked by significant growth in assets, prudent fee management, and robust adherence to regulatory and internal controls. However, investors should remain alert to the inherent volatility of the crypto market, the ETF’s reliance on a small pool of authorized participants, and the lack of cash distributions. The voluntary fee reduction provides a competitive edge, but ongoing market and operational risks are substantial and must be carefully weighed.

Disclaimer: This article is based on the Hashdex Nasdaq CME Crypto Index ETF’s 2025 Annual Report. All forward-looking statements are subject to significant risks and uncertainties, including but not limited to market volatility, regulatory changes, and crypto-specific risks. Past performance does not guarantee future results. Investors should consult their financial advisors before making investment decisions. The author and publisher assume no responsibility for any losses arising from reliance on this information.

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