The US Securities and Exchange Commission’s move to streamline the approval process for crypto exchange-traded products (ETPs) could lead to an influx of new offerings; however, this does not ensure their success, cautions a crypto executive.
“The introduction of general listing standards — expected as soon as October — is poised to bring forth a multitude of new crypto ETPs. This is logical and supported by ETF historical data,” stated Bitwise chief investment officer Matt Hougan in a report on Monday.
Nevertheless, Hougan cautioned against equating the launch of a crypto ETF with a resurgence of enthusiasm for cryptocurrencies.
Crypto ETFs’ “mere existence” no guarantee of success
“The mere presence of a crypto ETP does not assure significant inflows. There must be genuine interest in the underlying asset,” Hougan remarked.
“I believe ETPs based on assets like Bitcoin Cash will struggle to attract investments unless those assets experience a revival,” he added.
However, Hougan highlighted that launching ETFs positions these products to capitalize on market rallies when the “fundamentals begin to shift,” as ETFs facilitate easier capital allocation to crypto for traditional investors.
Sygnum’s research leader, Katalin Tischhauser, informed Cointelegraph in February that there is a “lot of buzz in the market regarding these ETFs, but it’s unclear where significant demand will originate.”
This week, two new altcoin exchange-traded funds tracking XRP (XRP) and Dogecoin (DOGE) are anticipated to launch in the US.
On July 3, the US’ first Solana (SOL) staking ETF concluded its debut trading day with $12 million in inflows, which Bloomberg ETF analyst James Seyffart described as a “strong start to trading.”
The SEC is currently reviewing spot crypto ETFs one by one, requiring issuers to submit detailed proposals demonstrating that the underlying market is sufficiently liquid and not prone to manipulation, among other criteria.
New process would see compliant crypto ETFs “virtually guaranteed”
The review process can extend up to 240 days, with no assurance of approval.
Related: Spot BTC ETFs attract $642M, ETH adds $406M amid ‘rising confidence’
According to the new process the SEC is developing, applications would be “virtually guaranteed” if they fulfill specific requirements, noted Hougan. “It’s also expedited: Applications would get approved in 75 days or less.”
Bitfinex analysts indicated on Aug. 26 that altcoins might not experience a widespread, significant rally until the approval of crypto ETFs that offer exposure to investors further down the risk spectrum.
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