Key takeout
- The SEC has given the green light for general listing criteria concerning crypto ETFs.
- This new framework is anticipated to spark a wave of crypto ETF listings soon.
- Under the revised guidelines, crypto ETFs can be approved more swiftly if the underlying assets have had a futures market on a regulated exchange for at least six months, among other conditions.
The Securities and Exchange Commission is setting the stage for an influx of new crypto-focused exchange-traded funds.
On Wednesday, the SEC revealed that it had approved a set of general listing standards for products traded on exchanges, aiming to facilitate quicker tracking of crypto fund approvals. This is a significant move, especially since it covers major exchanges like NASDAQ, CBOE BZX, and NYSE ARCA—essentially streamlining the process by eliminating the need for individual recognition by section 19(b) of the Securities and Exchange Act of 1934.
Previously, launching a Spot Crypto Fund involved a lengthy process including public comments and SEC reviews, which is likely why most existing Bitcoin and Ether ETFs have focused solely on these top two cryptocurrencies by market cap.
This new, more efficient approach is expected to shorten the time required to launch new funds, lower management costs, and allow ETF investors to take advantage of a wider array of cryptocurrencies. Notably, the new standards come after the SEC approved the first multi-crypto asset ETF in the U.S., the Grayscale Digital Large Cap Fund.
Why is this important to you?
Starting in October, we’re likely to see a flood of new crypto ETF launches, encompassing various digital assets never before included in investment vehicles. Imagine a Memecoin ETF that could include Dogecoin alongside other tokens. It seems like we could be entering a new era, with diversified crypto funds coming onto the market.
According to Bloomberg analyst James Seyfert, the critical criteria for crypto ETFs involves having an underlying futures market for assets available on regulated exchanges like Coinbase. Outside of the new framework, crypto ETFs can still go through traditional approval methods requiring individual filings.
The recent adjustments are perceived as a significant move toward clearer regulations on crypto by both the SEC and the current administration. They effectively break down barriers for companies wishing to incorporate various crypto assets into new products, which could be appealing to many investors.
Experts, including Seyffart, anticipate a wave of approvals for pending crypto ETF applications. “We’re about to see a rush in a few weeks,” he commented on X after the SEC’s announcement about the new framework.
Bitwise Chief Investment Officer Matt Hougan pointed out that when general listing criteria were established for traditional ETFs, the number of launches soared. “We’ve gone from about 117 launches a year to around 370,” he reported on X.
Digital asset service provider Galaxy noted that currently, 10 tokens meet the fast-listing criteria: Bitcoin, Dogecoin, Solana, Litecoin, Chainlink, Stellar, Avalanche, Shinobu, Polkadot, and Hedera, with a Dogecoin ETF being released today. Additionally, they mentioned that ADA and XRP will soon meet the criteria as well. Several ETF applications involving these coins have already been submitted to the SEC.
The SEC’s approval of the Spot Bitcoin ETF occurred in January 2024, marking more than a decade since Tyler and Cameron Winklevoss first applied for one. The ether ETF received approval the following July. Bitcoin ETFs now manage approximately $150 billion in assets, while Ether ETFs hold around $30 billion.
