Asset managers are lining up to launch cryptocurrency exchange-traded funds, capitalizing on growing excitement around digital assets while getting a boost from looser regulatory requirements.
The U.S. Securities and Exchange Commission’s (SEC) updated standards for ETFs, announced last week, could encourage demand for exchange-traded products tied to a wider range of cryptocurrencies, from Solana to Dogecoin.
New rules accelerate approvals
ETFs based on more traditional cryptocurrencies like Bitcoin and Ethereum were launched in 2024 under prior rules with stricter standards. Today, there are 21 U.S. ETFs that own either Bitcoin or Ethereum, or a combination of both.
Analysts expect the first products approved under the new rules — likely ETFs tied to cryptocurrencies Solana and XRP — to debut in early October.
“We’ve got about a dozen filings with the SEC now, and more coming,” said Steven McClurg, founder of Canary Capital Group, to Reuters agency. “We’re all getting ready for a wave of launches.”
The new listing standards eliminate the need for individual regulatory review of each crypto ETF application. This allows products that meet predetermined standards to launch without a lengthy, case-by-case approval process. According to industry sources, this will slash the approval time for new crypto products to 75 days or less, from up to 270 days previously.
“These are the rules we had been anticipating,” said Teddy Fusaro, president of Bitwise, to news agencies.
Grayscale first to market with multi-coin fund
Grayscale Investments was the first to act, rolling out its new Grayscale CoinDesk Crypto 5 ETF less than 48 hours after the SEC’s vote. The new fund owns Bitcoin, Ethereum, XRP, Solana, and Cardano.
Peter Mintzberg, CEO of Grayscale, said the ETF’s approval reflects Grayscale’s advocacy for “public market access, regulatory clarity and product innovation.”
Faster path to market
To benefit from the new, speedier process, an ETF must meet at least one of three criteria. It can qualify if the underlying cryptocurrency already trades on a regulated market, has futures contracts regulated by the U.S. Commodity Futures Trading Commission (CFTC) that have traded for at least six months, or if another existing ETF has at least 40% of its assets invested in the cryptocurrency itself.
“Not all of our existing filings qualify,” said Kyle DaCruz, director of digital assets product at VanEck, to the media. “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.”
Uncertainty over investor demand
What remains unclear is the appetite for dozens of crypto ETFs on lesser-known coins and how they might fit into investor portfolios.
“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,” said DaCruz.
