In a significant development for the cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) has approved new generic listing standards specifically for commodity-based trusts. This move is anticipated to pave the way for a broader array of crypto products to enter the marketplace, expanding beyond the existing Bitcoin and Ethereum offerings.
The newly established standards, which apply to exchanges such as Nasdaq, Cboe BZX, and NYSE Arca, enable trusts that meet specific criteria to list without requiring a separate order from the SEC. This innovation aims to streamline the approval process for commodity or crypto-linked products, although it does prohibit leveraged and inverse structures.
Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, expressed that the approval is momentous and could potentially allow between 12 to 15 different cryptocurrencies to obtain listing approval. “You start getting the coins coming in waves,” he noted, highlighting the significance of this change as there are currently only two approved under the Securities Act of 1933, commonly known as the ’33 Act.’
The ’33 Act covers the initial offer and sale of securities, mandating that issuers register their products with the SEC and provide necessary disclosures to the public. Balchunas stated that the current regulations had previously made it challenging for commodity-style funds to register.
Investors could benefit significantly from these new standards, which permit the creation of spot ETFs featuring lower fees and narrower trading spreads, all within a structure that has undergone SEC vetting. “It’s a beautiful thing,” he said, expressing optimism about the potential for these products to improve market accessibility and investor confidence.
The SEC’s discussions around the new standards emphasize their intent to safeguard against fraudulent activities while enhancing market transparency and investor protection. To qualify under the new guidelines, the underlying assets must already trade on regulated markets, possess a track record in futures, or back an existing ETF boasting substantial exposure. Additionally, trusts will be required to disclose daily holdings, net asset values, and liquidity policies, and markets will face trading limits to prevent the misuse of sensitive information.
Balchunas views this development as setting the stage for a major surge in crypto ETF offerings since the debut of spot Bitcoin products last year. He provided insight into expected upcoming ETFs, predicting that Solana and Litecoin are likely to lead the next wave of approvals, potentially launching within the next month. In contrast, Dogecoin may not be far behind. However, he indicated that an XRP ETF could experience delays, as its futures do not yet meet the six-month criterion mandated by the new rules.
The evolving landscape of cryptocurrency regulation and product offerings continues to hold promise for investors and the broader market as the SEC’s recent actions mark a noteworthy shift in the realm of crypto assets.
