Key Takeaways
- The SEC has approved general listing standards for crypto ETFs.
- The new framework is expected to lead to an explosion in crypto ETF listings in the coming weeks and months.
- Under the new framework, crypto ETFs can be fast-tracked if the underlying crypto asset has had a futures market on a regulated exchange for at least six months and meets other standards.
The Securities and Exchange Commission has paved the way for a flurry of new crypto-related exchange-traded funds.
The SEC late Wednesday announced that it approved generic listing standards for commodity-based exchange-traded products, fast-tracking the approval for crypto funds. By approving the standards across Nasdaq, Cboe BZX, and NYSE Arca, the SEC has eliminated the need for individual approvals under Section 19(b) of the Securities Exchange Act of 1934.
Prior to the new guidance, spot crypto fund issuers were subject to a lengthy application process that required public comment and SEC review, which is why most of the crypto ETFs that have launched to date covered bitcoin and ether, the two largest cryptocurrencies by market cap.
The streamlined approach is expected to shorten launch timelines, cut administrative costs, and and make more cryptocurrencies available to investors in an ETF wrapper. The new standards came with the approval of the first multi-crypto asset ETF in the U.S., the Grayscale Digital Large Cap Fund, or GLDC, which in addition to crypto and ether holds XRP, solana and cardano.
Why This Matters to You
Investors will likely see a tidal wave of new crypto ETF launches starting in October, with all manner of digital assets that have never before landed in an investment vehicle. Think memecoin ETFs that hold doge and trump, and multi-crypto asset funds aimed at delivering on a theme like tokenization.
The main listing criteria for a crypto ETF will be the existence of a futures market for the underlying asset on a regulated exchange, such as Coinbase, for a period of at least six months, according to Bloomberg analyst James Seyffart. Crypto ETF offerings that fall outside the framework can still go through the traditional approval process via individual filings.
The latest changes are seen by the crypto industry as a step forward for continued regulatory clarity on crypto from the SEC and the Trump administration. They remove a boundary between firms seeking to put a range of crypto assets into a new product and investors who might be interested in such products.
The mass approval of pending crypto ETF applications had been predicted by Seyffart and other experts. “We’re gonna be off to the races in a matter of weeks,” Seyffart posted on X following the SEC approval of the new framework.
Bitwise Chief Investment Officer Matt Hougan noted that there was a massive increase in ETF listings when generic listing standards were created for traditional ETFs in the past. “The pace of ETF launches rose from ~117/year to ~370/year,” he posted on X.
Digital assets platform and services provider Galaxy says 10 tokens currently meet the criteria for an expedited listing: Bitcoin, Dogecoin, Solana, Litecoin, Chainlink, Stellar, Avalanche, Shiba Inu, Polkadot and Hedera. (A dogecoin ETF launched today.) ADA and XRP will also qualify shortly, according to Galaxy. Several applications to launch ETFs holding those coins have already been submitted to the SEC.
The SEC approved spot bitcoin ETFs in Jan. 2024, more than 10 years after Tyler and Cameron Winklevoss first submitted an application for one. Ether ETFs were approved that July. Bitcoin ETFs have about $150 billion in assets under management, while ether ETFs have just under $30 billion.
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