The US Securities and Exchange Commission’s efforts to simplify the approval process for crypto exchange-traded products (ETPs) could lead to an influx of new offerings, but a crypto executive cautions that success is not assured.
“The introduction of standardized listing criteria — anticipated as soon as October — is likely to bring forth numerous new crypto ETPs. This is logical, and it’s also supported by historical trends in ETFs,” Bitwise’s chief investment officer Matt Hougan remarked in a report released on Monday.
However, Hougan cautioned that the introduction of a crypto ETF should not be mistaken for renewed enthusiasm for cryptocurrency.
Crypto ETFs’ “mere existence” no guarantee of success
“The mere presence of a crypto ETP does not assure considerable inflows. There must be genuine interest in the underlying asset,” Hougan stated.
“I believe ETPs based on assets like Bitcoin Cash will struggle to attract investments unless those assets experience a resurgence,” he added.
Nonetheless, Hougan stressed that launching ETFs positions these products to thrive when “the fundamentals begin to shift,” as ETFs facilitate capital allocation to crypto from traditional investors.
Katalin Tischhauser, head of research at Sygnum, mentioned to Cointelegraph in February that there is “a lot of overheated excitement surrounding these upcoming ETFs, but no one can identify where substantial demand will originate.”
Two new altcoin exchange-traded funds are set to launch in the US this week, focusing on XRP (XRP) and Dogecoin (DOGE).
On July 3, the US’ inaugural Solana (SOL) staking ETF wrapped up its first trading day with $12 million in inflows, which Bloomberg ETF analyst James Seyffart described as a “strong start to trading.”
At present, the SEC evaluates spot crypto ETFs one by one. Issuers must submit comprehensive proposals demonstrating that the underlying marketplace is sufficiently liquid and resistant to manipulation, among other criteria.
New process would see compliant crypto ETFs “virtually guaranteed”
The review process can last up to 240 days, with no assurance of approval.
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Under the SEC’s forthcoming process, applications would be “virtually guaranteed” approval if they follow specific standards, Hougan indicated. “It’s also expedited: Applications would receive approval in 75 days or less.”
Bitfinex analysts remarked on Aug. 26 that altcoins might not experience a significant rally until the introduction of crypto ETFs that provide investors exposure further down the risk spectrum.
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