'End of an era:' SEC approval of exchanges' listing standards marks turning point for crypto ETFs

The U.S. Securities and Exchange Commission's move to approve listing standards for cryptocurrency funds is being hailed as a "huge deal" by crypto advocates, and others predict the new, faster process will usher in dozens of cryptocurrency exchange-traded funds in the coming weeks.

On Wednesday, the SEC approved listing standards proposed by three exchanges, asking the agency to change a rule governing the trading and listing of commodity-based trust shares, which sets out specific requirements to have certain shares listed on their exchanges. The approval means that dozens of crypto ETF applications could go live soon.

Under current rules, exchanges must file a 19b-4 form for crypto ETFs, triggering a review period of up to 240 days. The new listing standards will reduce that timeline to as little as 75 days and allow the listing and trading of crypto exchange-traded products [ETP] that meet those standards without the 19b-4 form requirement.

"This is the crypto ETP framework we've been waiting for," said Bloomberg Intelligence Analyst James Seyffart on Wednesday in a post on X. "Get ready for a wave of spot crypto ETP launches in coming weeks and months."

Under the now-approved listing standards, firms looking to issue cryptocurrencies that have a futures contract that has been trading on a regulated exchange, such as Coinbase, for six months would be eligible, Seyffart added.

SEC Commissioner Hester Peirce noted that exchanges could expand their criteria for their listing standards over time.

"Exchanges, for example, could propose objective quantitative standards as another eligibility option, to enable additional products to come to market more quickly and with more predictability," Peirce said in a statement.

Many predict that the crypto ETF "floodgates" are about to open. Bloomberg's senior ETF analyst Eric Balchunas says there's a "good chance" more than 100 crypto ETFs will be launched in the next 12 months.

"Expect an absolute deluge of new filings & launches," NovaDius Wealth President Nate Geraci said. "You may not like it, but crypto is going mainstream via the ETF wrapper. And ETFs will serve as the perfect bridge b/w tradfi & defi."

'End of an era'

The SEC's stance toward crypto has changed dramatically since the start of the Trump administration in January. President Donald Trump, who has changed his views toward the industry, is now supportive of crypto and has launched stablecoins, and has family ties to the decentralized finance platform World Liberty Financial.

Under the Biden administration, the SEC took a much more cautious approach to crypto while bringing lawsuits against big players in the space, including Coinbase and Binance. The agency also applied that approach to crypto ETFs, but later greenlit spot bitcoin ETFs and then Ethereum ETFs, following a pivotal court ruling brought by Grayscale.

Trump also tapped crypto-friendly regulator Paul Atkins to lead the SEC. Atkins has since embarked on an initiative called "Project Crypto" to modernize the agency's existing rules around digital assets. On Thursday, Atkins said the agency's approval "helps to maximize investor choice and foster innovation by streamlining the listing process."

“By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets," Atkins said in a statement.

Jake Chervinsky, chief legal officer at the Variant Fund, called the SEC's approval of the listing standards a "huge deal" and the "end of an era," in a post on X.

"It’s the end of an era where the SEC allegedly 'protected investors' by denying them access to products they wanted on the venues they preferred," Chervinsky said. "This SEC continues to knock it out of the park."

Solana Policy Institute President Kristin Smith said the SEC is continuing to set clear rules for digital assets.

"These new generic listing standards are a net-positive for U.S. investors, markets, and digital asset innovation," Smith said in a statement. "Excited for the next wave of crypto adoption!"

Concerns

SEC Commissioner Caroline Crenshaw, the sole Democrat on the commission, said the agency was "passing the buck" and warned that crypto ETPs are still new.

"... the Commission is passing the buck on reviewing these proposals and making the required investor protection findings, in favor of fast tracking these new and arguably unproven products to market," Crenshaw said in a statement. 

Crenshaw also voiced concerns over the use of the terms ETP and ETF, given that ETPs have less oversight and don't have the protections that ETFs do.

"If this seems complicated, it is, and the proposal piles on with more confusion and conflation in the form of its eligibility criteria for generically listing these products," Crenshaw said.