The US Securities and Exchange Commission’s efforts to simplify the approval process for crypto exchange-traded products (ETPs) could lead to a wave of new offerings; however, a crypto executive cautions that this doesn’t ensure their success.
“The introduction of standard listing criteria — potentially arriving as early as October — is likely to pave the way for numerous new crypto ETPs. This is logical, but it is also supported by historical ETF trends,” said Matt Hougan, Bitwise’s chief investment officer, in a report released on Monday.
Nonetheless, Hougan cautioned that the emergence of a crypto ETF should not be mistaken for a resurgence in cryptocurrency enthusiasm.
Crypto ETFs’ “mere existence” not a success guarantee
“The mere presence of a crypto ETP does not ensure significant capital inflows. There must be genuine interest in the underlying asset,” Hougan explained.
“I believe ETPs associated with assets like Bitcoin Cash will struggle to attract investment unless the asset itself sees a revival,” he added.
However, Hougan stressed that the introduction of ETFs places these products in a favorable position to thrive when “the fundamentals begin to shift,” as ETFs facilitate easier capital allocation to crypto for traditional investors.
Katalin Tischhauser, head of research at Sygnum, noted to Cointelegraph in February that there exists “a great deal of excitement in the market surrounding these ETFs, yet no one can identify where the substantial demand will originate.”
This week, two new altcoin exchange-traded funds tracking XRP (XRP) and Dogecoin (DOGE) are anticipated to launch in the US.
CoinMarketCap
On July 3, the US’s first Solana (SOL) staking ETF concluded its inaugural trading day with $12 million in inflows, which Bloomberg ETF analyst James Seyffart characterized as a “healthy start to trading.”
At present, the SEC evaluates spot crypto ETFs on a case-by-case basis. Issuers must submit comprehensive proposals demonstrating that the underlying market is sufficiently liquid and resistant to manipulation, among other stipulations.
New process would make compliant crypto ETFs “virtually guaranteed”
The review process can extend up to 240 days, without any assurance of approval.
Related: Spot BTC ETFs garner $642M, ETH gains $406M amid ‘growing confidence’
Under the new process the SEC is developing, applications would be “virtually guaranteed” if they fulfill specific criteria, according to Hougan. “It’s also expedited: Applications would see approval in 75 days or less.”
Bitfinex analysts stated on Aug. 26 that altcoins might not experience a widespread, significant rally until the approval of crypto ETFs that offer investors exposure along the risk spectrum.
Magazine: Meet the Ethereum and Polkadot co-founder who wasn’t in Time Magazine
