A wave of new cryptocurrency exchange-traded funds (ETFs) is set to enter the U.S. market in the coming weeks, driven by asset managers eager to take advantage of the Securities and Exchange Commission’s (SEC) recent changes to its approval process for digital asset products.
The SEC’s decision to implement generic listing standards for spot cryptocurrency ETFs marks a significant departure from its previous protocols, which required each product to undergo extensive individual reviews. This new approach allows asset managers to launch ETFs linked to a variety of cryptocurrencies—such as Solana, XRP, and Dogecoin—provided they meet established criteria, such as having underlying assets traded on regulated markets or possessing futures contracts regulated by the Commodity Futures Trading Commission.
Industry experts report that the SEC’s latest measures have already prompted a flurry of new filings. Steven McClurg, founder of Canary Capital Group, shared that his firm currently has approximately a dozen pending filings with the SEC, with more on the horizon. He noted that the industry is preparing for an influx of new offerings.
The recently updated standards are expected to drastically shorten the time from filing to launch to 75 days or less, compared to the previous timeline that could stretch up to 270 days. This acceleration is a critical element in the anticipated surge of new products.
“These are the rules we had been anticipating,” commented Teddy Fusaro, president of Bitwise Asset Management. The first ETFs to debut under these new guidelines are anticipated to track Solana and XRP, with launch dates potentially occurring as soon as October. Currently, there are 21 U.S. ETFs that hold either Bitcoin or Ethereum, but many more filings for products linked to a wider range of digital assets are waiting in the wings.
Grayscale Investments was among the pioneers to leverage the SEC’s new framework, introducing its Grayscale CoinDesk Crypto 5 ETF just two days after receiving approval for its conversion from a private to a publicly traded fund. This ETF includes Bitcoin, Ethereum, XRP, Solana, and Cardano. Peter Mintzberg, CEO of Grayscale, called the approval a win for “public market access, regulatory clarity, and product innovation.”
The new rules provide multiple pathways for asset managers to achieve ETF approval. If a proposed ETF’s underlying cryptocurrency is already traded on a regulated market or has CFTC-regulated futures contracts that have been active for at least six months, it qualifies for expedited approval. Additionally, if an existing ETF linked to the same cryptocurrency allocates at least 40% of its assets directly in that digital asset, new products may also qualify for swift approval.
Despite this progress, not every pending filing may meet the newly established criteria. Kyle DaCruz, director of digital assets product at VanEck, mentioned they are currently evaluating which products can advance and how quickly they can be launched. “The next step is to talk to our lawyers to see which products can move forward,” he stated.
The SEC’s recent actions are viewed as a defining moment for the digital asset sector, overturning a decade of previous policy since the first Bitcoin ETF filing in 2013. However, some in the industry caution that the rapid introduction of crypto ETFs necessitates significant investor education, particularly regarding lesser-known coins. DaCruz emphasized that a plethora of tokens unfamiliar to many investors is on the horizon, highlighting the urgency of providing educational resources.
While the new rules are advantageous for the expansion of crypto ETFs, observers note that not all tokens will qualify immediately. Steve Feinour, a partner at Stradley Ronon, expressed expectations that most asset managers will pursue approval through the route of established CFTC-regulated futures contracts. “Not every token is going to currently qualify, but [the SEC approval] will open up the floodgates,” he concluded.
