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New bitcoins are created through a process called mining. Network participants, called miners, perform energy-intensive computational calculations to provide network security. As remuneration for this work, miners receive newly created bitcoins in a special transaction on each block, known as a “coinbase” transaction. Currently, the participant who mines a block is remunerated with 6.25 new bitcoins. Every 210,000 blocks produced, or roughly every four years, the number of bitcoins created in each block drops by half, in an event known as “halving.”

A crypto asset is a completely digital currency or token that uses a blockchain to provide a medium of exchange. A key attribute is the use of cryptography, which allows two parties to securely send and receive data anywhere in the world without a trusted third party. Bitcoin (capital “B”) is the network that hosts the world’s first cryptocurrency—bitcoin (lowercase “b”). Thousands of other currencies and tokens have launched since the first bitcoin was created in 2009, but bitcoin remains the largest, making up more than 40% of the total market cap for crypto assets. The Ethereum network token, ether, is the second largest with approximately 20% of the total crypto asset market cap.

“Smart contract” is a term coined in 1997 by computer scientist, lawyer and cryptocurrency pioneer Nick Szabo to define a contract that is purely implemented by computer systems. Smart contracts are self-executing contracts that can be written in programming code. They enable transactions that are more sophisticated than simply sending and receiving digital assets, and are considered one of the most important applications that digital assets can provide.

The simplest definition of a blockchain is a decentralized public ledger where transactions are confirmed by a network of compensated participants. Blockchains can have different consensus mechanisms, such as PoW or Proof-of-Stake (PoS), which define the rules for validating transactions. For most crypto assets, each network node maintains a copy of the blockchain. This helps ensure the blockchain’s security by preventing anyone from altering transactions or taking control of the network. Bitcoin’s blockchain was a novel idea due to the combination of technologies used to create a truly decentralized and immutable public ledger. Previously, financial transactions were dependent on banks and other entities managing both sides of the transaction, including maintaining personal information about the parties and placing restrictions on certain transactions. Fully decentralized blockchains do not rely on any intermediary to confirm transactions and are not limited by geography, allowing for the elimination of gatekeepers from nearly any type of peer-to-peer transaction.

NCIQ’s management fee is 0.25% per annum.

The management fee is the all-in annual cost of owning the fund, reflected in the fund’s daily NAV.

At a minimum, any asset included in the NCI™ must: 1) Have a floating price. Stablecoins and other asset-pegged cryptos are excluded. 2) Trade on three core exchanges. Every exchange is regularly reviewed to maintain the integrity of the index. 3) Be supported by two qualified custodians. Each custodian is validated by an institutional-grade vetting process. 4) Have sufficient liquidity. Assets must have an average daily traded volume that is at least 0.5% of the volume for the crypto asset traded most frequently on a given day. 5) Represent a significant part of the market. Each eligible asset must represent at least 0.5% of the total crypto market capitalization. To adapt as more assets meet eligibility criteria, the selection of assets is reviewed quarterly by the Nasdaq CME Crypto Index™ Oversight Committee, which is responsible for the implementation, administration, and oversight of the index.

The NCI is an index Nasdaq developed in partnership with Hashdex in 2021 to provide a reliable and dynamic index for the crypto markets. It is a simple solution to gauge price trends and reflect the ongoing evolution taking place in the rapidly developing crypto ecosystem. The NCI represents the performance of the most mature and liquid crypto assets and the allocation to each NCI constituent is weighted by its relative market capitalization. The index only includes assets that meet strict eligibility criteria.

Creation and redemption is the mechanism that keeps an ETF’s market price close to its NAV. Authorized Participants (APs)—large institutional market makers—create new ETF shares by delivering assets to the fund, or redeem existing shares in exchange for assets.

The SEC approved in-kind creation and redemption for crypto ETPs in July 2025, a significant milestone. In-kind transactions allow APs to exchange the actual underlying crypto assets directly for ETF shares, rather than going through a cash conversion step. This improves efficiency and can reduce capital gains generated inside the fund.

NCIQ is a spot ETF that seeks to track the performance of the crypto assets in the Nasdaq CME Crypto Index. The fund does not use futures, derivatives, or leverage to gain crypto exposure.

The fund rebalances quarterly in line with the NCI reconstitution schedule.

Each quarter, NCIQ’s holdings are adjusted to align with the updated NCI composition and weights. Shareholders continue to hold NCIQ shares throughout; the NAV reflects the updated portfolio after rebalancing.

For institutional investors and financial advisors, the ETF structure solves several real operational problems that direct crypto ownership creates:

• No custody management: Private key security and wallet management are handled by institutional-grade custodians.

• Portfolio and reporting integration: Shares settle and report like any ETF, integrating seamlessly into existing portfolio management, compliance, and client reporting systems.

• Independent audits, daily NAV publication, and established investor protections.

• Index discipline: Portfolio governed by a published, rules-based methodology. There are no subjective asset selection decisions or ongoing rebalancing management required.

Hashdex conducts structured due diligence on all service providers, including custodians, exchanges, and OTC counterparties. The process covers four core dimensions: technology and infrastructure, regulatory and licensing status, organizational and financial soundness, and operational controls including insurance coverage and asset segregation practices. Critical providers, particularly custodians and execution counterparties with direct access to fund assets, are subject to enhanced due diligence, including detailed assessment of financial condition, cybersecurity controls, and key-management architecture. Provider assessments are overseen by an independent risk committee and are subject to periodic review, with ongoing monitoring of material changes in regulatory standing, financial condition, or operational risk profile.

Hashdex does not hold direct custody of NCIQ’s underlying assets. All private keys are held by three custodians: Coinbase Custody Trust Company LLC, BitGo Trust Company, and Fidelity Digital Assets.

Using three independent custodians is a deliberate risk management decision — if one custodian faces operational issues, the fund’s assets held with the others are unaffected. Key security practices across all three custodians include:

• Deep cold storage: The vast majority of assets are held in storage physically disconnected from the internet.

• Geographic dispersion: Key material is distributed across multiple secure locations, eliminating single points of failure.

• Multi-signature authorization: Any transfer requires multiple independent approvals — no single individual or system can unilaterally initiate a transaction.

• Settlement controls: Asset movements follow defined approval workflows, with up to two business days from authorization to transfer.

For all of our investment products, we have dedicated processes that rely on the approval of a committee with independent members to evaluate the choice of exchanges, custodians, and OTCs. In addition to understanding in detail each service provider’s technology, we delve deeply into its organizational structure. This includes proving the existence of the controls needed to ensure the service provider’s regulation is aligned with the local requirements of the funds. All of the individual crypto assets we invest in are part of indices that also have their own strict standards. For example, the Nasdaq CME Crypto Index™ (NCI™) has what we believe is a best-in-class methodology for eligibility criteria. For any asset to make its way into the NCI™, it must be supported by core exchanges and core custodians. Each exchange or custodian must be an institutional-grade and regulated service provider with compliance practices (including AML and KYC) that meet Nasdaq’s strict due diligence process.

Safety is paramount in our operation. All of our assets are stored by institutional custodians who employ the most advanced practices, such as geographic dispersion, sharding, and deep cold storage. Our technological infrastructure is monitored 24/7 and constantly improved to protect our customers' information. In addition to the issue of physical security and custody of crypto assets, we offer our investors access to regulated investment products with the highest standards of governance.

The NCI is market-cap weighted. Each constituent’s weight at quarterly rebalancing is determined by its relative free-float market capitalization, calculated using real-time prices and available circulating supply at the rebalancing date.

Once set, constituent quantities are held fixed throughout the quarter, allowing passive tracking without continuous rebalancing. To manage single-asset concentration, the NCI methodology applies a cap at rebalancing, ensuring the index retains its diversified character even when one asset dominates market capitalization.

To qualify for NCI inclusion at each quarterly review, an asset must meet all of the following:

• Floating price: Stablecoins, wrapped tokens, and other asset-pegged instruments are excluded.

• Exchange listing: Must be listed on at least three core exchanges, each evaluated on regulatory standing, AML/KYC compliance, and trade surveillance.

• Custodian support: Must be supported by at least two qualified institutional custodians.

• Minimum liquidity: Average daily volume must be at least 0.5% of the most actively traded asset in the universe.

• Market significance: Must represent at least 0.5% of total crypto market capitalization.

The Nasdaq CME Crypto Index (NCI) is a rules-based, market-cap-weighted benchmark designed to represent the performance of the most mature and liquid segment of the digital asset market. It was developed in partnership between Hashdex and Nasdaq.

The NCI applies the same principles that define the Nasdaq-100: transparent eligibility criteria, rules-based selection, and systematic quarterly reconstitution. It includes only assets meeting rigorous standards for exchange listing, institutional custody support, liquidity, and market significance. The NCI is a global benchmark: NCIQ in the United States, HASH11 in Brazil, and HASH in Europe all track the same index.

The NCI is administered by the Nasdaq CME Crypto Index Oversight Committee, an independent body responsible for the implementation, administration, and ongoing governance of the index methodology. The Committee meets quarterly ahead of each reconstitution to review the eligible universe and determine index composition.

This governance structure mirrors the oversight model used by major traditional indices, providing an important layer of independence between the index methodology and the investment products that track it. No single commercial party, including Hashdex, can unilaterally alter the index composition.

NCIQ trades on Nasdaq like any other ETF. Investors can buy and sell shares through any brokerage account that provides access to U.S.-listed ETFs—including retail brokerages, RIA custodian platforms, and institutional trading systems—during regular market hours.

No cryptocurrency wallet, crypto exchange account, or special setup is required. The ETF structure handles all underlying crypto custody and management on behalf of investors.

The Nasdaq CME Crypto Index uses a strict, rules-based eligibility framework. To qualify, an asset must meet all of the following at each quarterly review:

• Floating price: Stablecoins, wrapped tokens, and asset-pegged instruments are excluded by design.

• Exchange listing: Must be listed on at least three core exchanges, each independently vetted for regulatory standing, AML/KYC compliance, and trade surveillance.

• Custodian support: Must be supported by at least two qualified institutional custodians.

• Minimum liquidity: Average daily volume must be at least 0.5% of the most actively traded asset in the universe.

• Market significance: Must represent at least 0.5% of total crypto market capitalization.

The eligible universe is reviewed quarterly by the Nasdaq CME Crypto Index Oversight Committee. No single commercial party, including Hashdex, can unilaterally alter index composition.

NCIQ is the ticker for the Hashdex Nasdaq Crypto Index ETF, listed on Nasdaq. It is a spot crypto ETF that tracks the Nasdaq CME Crypto Index (NCI), a rules-based, market-cap-weighted benchmark co-developed by Hashdex and Nasdaq.

NCIQ currently gives investors exposure to seven assets: Bitcoin, Ether, XRP, Solana, Cardano, Chainlink, and Stellar—each meeting the NCI’s strict eligibility criteria. The portfolio rebalances quarterly.

Key details: Ticker NCIQ · Nasdaq-listed · Spot structure · 0.25% management fee · Custodians: Coinbase Custody Trust Company LLC, BitGo Trust Company, and Fidelity Digital Assets

NCIQ’s management fee is 0.25% per annum.

The management fee is the all-in annual cost of the fund that covers administration, index licensing, and operational expenses. Standard brokerage commissions may apply when buying or selling NCIQ shares, depending on the broker.