On Wednesday, the Securities and Exchange Commission (SEC) approved a proposal that should greatly accelerate the approval of future spot crypto ETFs. What will change now?
SEC approves major rule for spot crypto ETFs
As we first saw with Bitcoin (BTC) and Ethereum (ETH), the approval of a new family of spot crypto ETFs is a long and tedious regulatory process in the United States. It can take months, even years, and the market now expects to see the arrival of spot ETFs on assets such as XRP, SOL, or even DOGE.
In an attempt to simplify this regulatory process, Nasdaq, Cboe BZX, and NYSE Arca have proposed to the Securities and Exchange Commission (SEC) that it approve a simplified approval process, which should speed up the procedures for creating spot crypto ETFs:
As described in more detail in the respective amended Proposal documents, each Exchange proposes to adopt listing standards that are “generically ” for Commodity-Based Trust shares, so that it would be permissible, pursuant to Rule 19 b-4(e) of the Exchange Act, to list and trade Commodity-Based Trust shares without first submitting a rule change proposal to the Commission, pursuant to Section 19(b) of the Exchange Act.
In response, the SEC responded favorably by approving this request:
These amended documents clarify the definitions and requirements of the proposed generic listing standards. These amendments are technical in nature and do not materially alter the substance of the proposed rule changes or raise new regulatory issues. Furthermore, they assist the Commission in evaluating the Proposals and determining their compliance with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange, as noted above.
A year ago, such a response from the SEC would have been unthinkable, and it is in line with the openness to the ecosystem that has been observed for several months.
To benefit from this fast track, a given cryptocurrency must still meet several eligibility criteria:
- Be listed on an exchange that is a member of the Intermarket Surveillance Group (ISG);
- Have futures contracts that have been traded for more than six months on an exchange that has entered into a comprehensive surveillance sharing agreement (CSSA);
- The ETF in question must offer at least 40% exposure to the underlying asset and be traded on a national exchange.
In concrete terms, crypto-based ETFs available on Coinbase that have had futures contracts for more than six months would be eligible for this fast track.
On X, Bloomberg ETF analyst Eric Balchunas observed that currently, 12 to 15 cryptos appear to meet these new conditions:
This list includes names such as SOL, XRP, SHIBA, ADA, and DOT. This does not necessarily mean that there will be ETFs for each of these securities, but when there are, the approval process should now be shorter.
