SEC's new rules set stage for wave of crypto ETFs

A surge of new cryptocurrency exchange-traded funds is expected to hit the US market in the coming weeks, as asset managers move quickly to capitalize on the Securities and Exchange Commission’s streamlined approval process for digital asset products.

The commission’s recent decision to adopt generic listing standards for spot cryptocurrency ETFs marks a significant shift from its previous approach, which required each product to undergo a lengthy, case-by-case review.

Under the new rules, asset managers can launch ETFs tied to a range of cryptocurrencies – including solana, XRP, and dogecoin – if their products meet specific criteria, such as underlying assets trading on regulated markets or having established futures contracts regulated by the Commodity Futures Trading Commission.

Industry participants say the new process has already triggered a rush of filings. Steven McClurg, founder of Canary Capital Group, told Reuters that his firm has “about a dozen filings with the SEC now, and more coming,” adding that the industry is preparing for “a wave of launches.”

The SEC’s updated standards, announced last week, are expected to reduce the maximum time from filing to launch to 75 days or less, down from as long as 270 days under the previous regime. This acceleration is seen as a key factor behind the anticipated influx of new products.

“These are the rules we had been anticipating,” Teddy Fusaro, president of Bitwise Asset Management, said to Reuters.

The first new ETFs to launch under the new standards are expected to track Solana and XRP, with analysts predicting debut dates as early as October. There are currently 21 US ETFs that hold bitcoin, ethereum, or both, but scores of new filings are pending for products tied to less mainstream digital assets.

Grayscale Investments was among the first to take advantage of the new framework, introducing its Grayscale CoinDesk Crypto 5 ETF less than two days after the SEC allowed its conversion from a private to a publicly traded fund. The ETF holds bitcoin, ethereum, XRP, solana, and cardano. Peter Mintzberg, CEO of Grayscale, said the approval reflected the firm’s advocacy for “public market access, regulatory clarity and product innovation.”

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For asset managers, the new rules offer several pathways to approval. If a proposed ETF’s underlying coin already trades on a regulated market or has CFTC-regulated futures contracts that have traded for at least six months, it qualifies for expedited approval. Alternatively, if another ETF tied to the same coin has at least 40% of its assets invested directly in the cryptocurrency, new products may also qualify.

However, not all pending filings will meet the new criteria.

Kyle DaCruz, director of digital assets product at VanEck, disclosed to Reuters that his firm is reviewing which products can move forward and how quickly they can be brought to market. “The next step is to talk to our lawyers to see which products can move forward and how rapidly will they get onto the market,” he said.

The SEC’s move is widely seen as a pivotal moment for the digital asset industry, overturning more than a decade of precedent since the first bitcoin ETF filing in 2013. Still, some industry voices caution that the rapid expansion of crypto ETFs will require significant investor education, particularly for products tied to lesser-known coins. “There will be a flood of tokens that many folks have never heard of, and instead of years as with bitcoin, there will be weeks or months to provide that education,” DaCruz said.

While the new rules are expected to open the doors to a broader array of crypto ETFs, some observers note that not every token will qualify immediately. Steve Feinour, a partner at Stradley Ronon, said he expects most asset managers to seek approval through the provision for coins with established CFTC-regulated futures contracts.

“Not every token is going to currently qualify, but [the SEC approval] will open up the floodgates,” he said in a separate Reuters report.

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