SEC Advises Companies to Withdraw 19b-4s; ETFs Might Be Approved Very Quickly

SEC Encourages ETF Issuers to Simplify Processes

The Securities and Exchange Commission (SEC) has urged issuers of Crypto Exchange-Traded Funds (ETFs) to withdraw their 19B-4 filings. This move aims to expedite the approval process following the recent rule changes, which have eliminated critical regulatory obstacles.

Earlier this month, the SEC registered new generic listing standards. These standards permit the listing of exchange products (ETPs) linked to cryptocurrencies without necessitating separate reviews for each product. As a result, launching Spot Crypto ETFs is expected to encounter fewer regulatory barriers.

Traditionally, issuers had to collaborate with exchanges to file a 19B-4, which was a formal request to amend exchange rules prior to listing the ETF. However, with the revised system, this step is no longer needed for individual products. To gain SEC approval, issuers now only need to submit an S-1, detailing the ETF’s structure and strategy.

“Historically, the SEC can move quite swiftly. We might see approvals in just a few days, but I wouldn’t want to make any guarantees,” one source noted.

Interestingly, they’re shifting to ETFs that are not yet approved, like the Bitwise BITW. I think this reflects how the SEC typically handles these filings, usually taking cues from other segments of the ETF industry. Maybe this will lead to a sort of chain reaction.

In recent months, asset managers have ramped up submissions for Spot Crypto ETFs, including coins like Solana, Litecoin, and Dogecoin. These proposals, notably, involve both 19B-4 and S-1 filings that were part of the previous two-step process.

By removing the 19B-4 requirement, approval times could be significantly reduced. Previously, this route involved exchanges such as NASDAQ and NYSE ARCA petitioning the SEC to tweak its own listing guidelines each time a new product was introduced.

The SEC’s updated position means exchanges can now list crypto-based ETFs under the general commodity ETP category without needing rule changes for each new product. However, it remains to be seen how quickly the SEC will process the outstanding S-1s. This shift definitely signals a change in the SEC’s attitude toward the crypto market.