Recent ETF Applications Signal Imminent Growth in Crypto Offerings

Investment firms are inundating regulators with proposals for advanced crypto exchange-traded funds, shifting from simple spot products to more complex leveraged and actively managed strategies aimed at increased institutional crypto participation.

According to Bloomberg ETF analyst Eric Balchunas, this trend is evident, tweeting on Sunday that there will be numerous new filings from 21Shares including an active crypto ETF and products with 2x leverage for Dogecoin and Sui.

The new filings indicate how issuers are maneuvering to stay ahead of potential regulatory moves while gearing up for an October period that could result in multiple approvals.

Several issuers revisited their XRP ETF applications, likely in response to SEC input. James Seyffart from Bloomberg described this as a good sign, yet anticipated.tweeted on Saturday.

Industry specialists concur with Balchunas’s predictions regarding the impending surge of applications.

Charmaine Tam, head of OTC sales and trading at Hex Trust, shared with Decrypt that the approvals of spot Bitcoin and Ethereum ETFs have established a regulatory benchmark, which encourages issuers to pursue more complex offerings.

“Active ETFs represent a logical progression” for professional management, while “leveraged products cater to clients seeking a more aggressive approach,” she added.

Bridget Nichols, chief commercial officer at Monochrome, remarked to Decrypt that Balchunas “is generally well-informed about USA ETF and regulatory trends” and that his perspective is accurate in this rapidly changing digital asset environment.

She pointed out that actively managed crypto ETFs encounter challenges similar to traditional ones, emphasizing that “making directional bets is inherently risky,” and traditionally, passive funds tend to yield better long-term results.

“Passive ETFs usually outperform over extended time periods,” Nichols stated, noting that Bitcoin specifically has “a history of being difficult to exceed in performance.”

Any advantage in crypto markets is “extremely rare,” she emphasized, often arising from early token investments that are “unsustainable.”

ETFs in Focus

Recent announcements indicate that JPMorgan is considering offering financing options against crypto ETFs, which Tam described as “a significant indication of mainstream acceptance” that brings new capital efficiency for institutional investors.

However, delays persist on several fronts, with the SEC postponing decisions regarding Trump Media’s Bitcoin-Ethereum ETF until October 8, while extending timelines for spot XRP applications from Grayscale, CoinShares, Canary Capital, Bitwise, and 21Shares.

The decisions on Solana ETFs from Bitwise, 21Shares, VanEck, and others also face delays until October 16, as regulators require “sufficient time to review” the applications.

Key issuers like Invesco Galaxy, Ark 21Shares, and others have recently initiated amendments seeking in-kind redemptions for their Bitcoin and Ethereum ETFs, which Seyffart previously labeled as “positive signs” indicating “refinements in progress with the SEC.”

Balchunas recently told Decrypt that the recent delays were “not significant” and anticipated “a series of approvals based on the listing standard beginning in October.”

Peter Chung, head of research at Presto Labs, supported Balchunas’s timeline forecasts, noting the performance challenges, stating to Decrypt that “whether crypto or not, the challenge for any actively managed ETF is the ability of the managers to outperform a benchmark.”

Crypto ETFs are “undoubtedly more volatile,” he remarked, stressing that retail investors need to be well-informed, but fundamentally, the products are about “enhancing investor options.”