The remainder of the year is poised to be a pivotal time for crypto ETFs and their issuers, as experts anticipate a significant boom in these investment vehicles. With the US Securities and Exchange Commission (SEC) now adopting a more favorable stance toward crypto assets, the stage is set for a surge in ETF applications.
Industry insiders are optimistic about the potential for new products that aim to provide exposure to alternative cryptocurrencies like XRP, Dogecoin (DOGE), Solana (SOL), Cardano (ADA), and Hedera (HBAR).
SEC Streamlines Crypto ETF Approval Process
The SEC’s newly updated standards for crypto ETFs, announced just last week, promise to stimulate demand for exchange-traded products linked to these cryptocurrencies.
Analysts are particularly eager about the anticipated approval of products associated with Solana and XRP, with expectations that these ETFs could make their debut as early as October.
Steven McClurg, founder of Canary Capital Group, noted a surge in filings with the SEC, stating, “We’ve got about a dozen filings with the SEC now, and more coming. We’re all getting ready for a wave of launches.”
Jonathan Groth, partner at DGIM Law, also pointed that the fourth quarter of the year is shaping up as “boom time” for the crypto ETF market, further adding to the anticipation for the altcoins to join this trend.
The SEC’s recent vote to adopt new listing standards streamlines the approval process, reducing the time required for new crypto products to launch from up to 270 days to 75 days or less.
This change eliminates the need for individual regulatory reviews for each application, allowing firms to bring products to market more swiftly. As Teddy Fusaro, president of Bitwise, explained, “These are the rules we had been anticipating.”
Market Readiness In Question
Grayscale has already taken advantage of this, rolling out its Grayscale CoinDesk Crypto 5 ETF less than 48 hours after receiving approval from the SEC to transition from a private to a publicly traded fund. This ETF includes major cryptocurrencies such as Bitcoin and Ethereum, alongside XRP, Solana, and Cardano.
To qualify for the expedited approval process, an ETF must meet at least one of three criteria: the underlying asset must already be traded on a regulated market or have futures contracts regulated by the US Commodity Futures Trading Commission (CFTC) that have been active for at least six months.
Alternatively, an existing crypto ETF tied to that coin, with at least 40% of its assets invested directly in the cryptocurrency, could also pave the way for approval.
Despite the excitement surrounding these new developments, questions remain about the market’s appetite for a flood of crypto ETFs centered on lesser-known coins.
Kyle DaCruz, director of digital assets product at asset manager VanEck, highlighted the need for investor education, noting, “There will be a flood of tokens that many folks have never heard of, and instead of years, there will be weeks or months to provide that education.”
Featured image from DALL-E, chart from TradingView.com
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