Nasdaq Expands ETF Launch Process to Hybrid Crypto Funds

New rule change aims to smooth volatility for upcoming dual-class crypto and traditional product debuts.

Apr. 8, 2026 at 8:50pm by Ben Kaplan

Got story updates? Submit your updates here. ›

An extreme close-up of complex financial machinery and mechanisms, such as gears, levers, and circuits, in muted metallic tones, conceptually representing the intricate inner workings of the financial system.As the regulatory framework for new financial products advances, the industry races to build the necessary operational infrastructure to support a wave of dual-class fund launches.San Francisco Today

Nasdaq has filed a rule change to expand its controlled ETF launch process to a new breed of hybrid dual-class funds, easing the path for a wave of crypto and traditional product debuts heading to market. The move targets Class ETF Shares, which blend the real-time tradability of an ETF with the share class flexibility of a mutual fund. This will allow these funds to access Nasdaq's orderly opening protocol, preventing volatile price swings during pre-market hours.

Why it matters

The timing of this rule change is crucial as major asset managers like BlackRock, Fidelity, JPMorgan, and Morgan Stanley are lining up to launch dual-class funds. These hybrid structures solve a key distribution problem by allowing financial advisors to convert existing mutual fund holdings into the ETF share class without triggering a taxable event. For crypto funds, a smoother launch mechanism directly benefits high-profile debuts where early volatility can deter institutional investors.

The details

Nasdaq's Initial ETP Open process holds new funds back from trading during thin pre-market hours, using the Nasdaq Halt Cross to establish a clean, orderly opening price. Until now, this controlled launch was unavailable to the specific class of dual-share funds recently approved under Nasdaq Rule 5703. This filing simply adds that rule to the eligibility list. The move comes as roughly 48 firms have already secured multi-class ETF exemptive relief out of approximately 100 total applications filed as of March 2026.

  • Nasdaq filed the rule change on April 7, 2026.
  • Nasdaq's Initial ETP Open process received SEC approval in May 2025.
  • Nasdaq's generic listing standards for Class ETF Share products were approved in November 2025.

The players

Nasdaq

The American stock exchange that has filed this rule change to expand its controlled ETF launch process.

BlackRock

A major asset management firm that is among the 48 companies that have secured multi-class ETF exemptive relief.

Fidelity

A major asset management firm that is among the 48 companies that have secured multi-class ETF exemptive relief.

JPMorgan

A major asset management firm that is among the 48 companies that have secured multi-class ETF exemptive relief.

Morgan Stanley

A major asset management firm that is among the 48 companies that have secured multi-class ETF exemptive relief.

Got photos? Submit your photos here. ›

What’s next

The Depository Trust and Clearing Corporation (DTCC) is building an automated solution for processing the exchange of mutual fund shares into ETF shares and back again, which is expected to go live on May 18, 2026. Full custodian and market maker integration may lag further behind, potentially stretching into late 2026 or early 2027.

The takeaway

Nasdaq's rule change is a crucial step in preparing the infrastructure to support the upcoming wave of dual-class crypto and traditional funds, which have the potential to reshape how these products come to market by solving key distribution challenges.