The U.S. Securities and Exchange Commission (SEC) has approved new generic listing standards for commodity-based exchange-traded products. This regulatory change is expected to significantly accelerate the launch of new exchange-traded funds (ETFs) based on various cryptocurrencies.
The new framework streamlines the approval process, removing the need for lengthy individual applications for each new fund. This move is anticipated to open the door for a wide range of digital assets to be offered to investors in an ETF format, expanding beyond Bitcoin and Ether.
Key Takeaways
- The SEC has established a unified framework for approving crypto-backed ETFs on major exchanges like Nasdaq, Cboe BZX, and NYSE Arca.
- This new process eliminates the need for individual, time-consuming approvals for each new fund.
- To qualify for the faster process, a crypto asset must have a futures market on a regulated exchange for at least six months.
- The change is expected to lead to a significant increase in the number and variety of crypto ETFs available to investors.
SEC Adopts New Framework for Crypto Funds
The Securities and Exchange Commission has implemented a significant policy shift by approving generic listing standards for crypto-asset ETFs. The decision, announced late Wednesday, applies to major exchanges including Nasdaq, Cboe BZX, and NYSE Arca.
Previously, any firm wanting to launch an ETF based on a cryptocurrency had to undergo a lengthy and complex approval process under Section 19(b) of the Securities Exchange Act of 1934. This required a separate application, public comment period, and detailed SEC review for every proposed fund.
Understanding the Old Process
The former case-by-case approval system created significant delays and uncertainty for asset managers. It was a primary reason why, for years, only ETFs for Bitcoin and Ether—the two largest cryptocurrencies by market capitalization—were able to secure regulatory approval and reach the market.
The new, streamlined approach removes this requirement for many digital assets. It creates a standardized pathway that is expected to shorten launch timelines, reduce administrative costs, and increase the diversity of crypto products available to the public.
Criteria for Expedited ETF Approval
Under the new guidelines, the path to launching a crypto ETF has become much clearer. The primary requirement for a fund to qualify for this accelerated process is tied to the maturity of its underlying asset's market.
Specifically, the cryptocurrency must have an established futures market that has been active on a regulated exchange for a minimum of six months. This criterion is designed to ensure that the asset has a reliable price discovery mechanism and a certain level of market stability.
A Historical Parallel
Bitwise Chief Investment Officer Matt Hougan noted that a similar change for traditional ETFs in the past led to a massive expansion. According to Hougan, the creation of generic listing standards caused the pace of traditional ETF launches to jump from approximately 117 per year to around 370 per year.
Digital assets that do not meet this futures market requirement can still be considered for an ETF. However, their issuers will need to go through the original, more detailed individual filing process with the SEC.
Immediate Effects and Market Expectations
The regulatory change has already produced its first result. The SEC approved the Grayscale Digital Large Cap Fund (GLDC), making it the first multi-crypto asset ETF in the United States. The fund holds not only Bitcoin and Ether but also XRP, Solana, and Cardano.
Market analysts predict a rapid increase in new crypto ETF filings and launches in the coming weeks and months. Bloomberg analyst James Seyffart commented on the development, stating, "We're gonna be off to the races in a matter of weeks."
This decision effectively removes a major regulatory barrier between asset management firms seeking to innovate with new crypto products and investors who are interested in gaining exposure to them.
This sentiment is shared across the industry, with many seeing it as a crucial step toward greater regulatory clarity and broader acceptance of digital assets within mainstream finance.
Which Cryptocurrencies Could Be Next?
With the new rules in place, attention has turned to which digital assets are now eligible for the fast-track ETF process. According to analysis from digital asset platform Galaxy, a number of well-known tokens already meet the six-month regulated futures market requirement.
The list of currently eligible assets includes:
- Bitcoin (BTC)
- Dogecoin (DOGE)
- Solana (SOL)
- Litecoin (LTC)
- Chainlink (LINK)
- Stellar (XLM)
- Avalanche (AVAX)
- Shiba Inu (SHIB)
- Polkadot (DOT)
- Hedera (HBAR)
Galaxy also noted that other major assets, such as Cardano (ADA) and XRP, are expected to qualify for the streamlined process shortly. Several applications to launch ETFs based on these cryptocurrencies have already been submitted to the SEC, signaling strong interest from fund issuers.
Background on Crypto ETFs
The journey to mainstream crypto ETFs has been long. The first application for a spot Bitcoin ETF was filed by Tyler and Cameron Winklevoss over a decade before the SEC finally approved the first batch in January 2024. ETFs based on Ether followed in July 2024. Since their launch, Bitcoin ETFs have accumulated approximately $150 billion in assets, while Ether ETFs hold nearly $30 billion.
The approval of these new standards suggests a new chapter for crypto-based investment products, potentially leading to thematic ETFs, such as those focused on memecoins or tokenization, becoming available to a wider investor audience.
