SEC Sets New Crypto ETF Standards, Dozen Major Tokens Could Qualify by October

The Securities and Exchange Commission (SEC) has established new listing standards for cryptocurrency exchange-traded products that could clear the path for approximately a dozen major digital assets to gain ETF approval by October.

The CBOE filing reveals that any cryptocurrency with futures contracts trading on designated markets for at least six months would automatically qualify for ETP listing under the new Generic Listing Standards framework.

CFTC Becomes Crypto ETF Gatekeeper as SEC Shifts Approval Authority

The breakthrough comes after months of regulatory uncertainty that saw the SEC both approve and immediately reverse decisions on multi-asset crypto ETFs.

Eric Balchunas noted that the eligible tokens include “the usual suspects” that previously held 85% or higher approval odds, with September and October emerging as the likely approval timeline for pending applications.

The new standards effectively outsource ETF approval decisions to the Commodity Futures Trading Commission, which oversees futures market designations.

The framework requires no specific market capitalization, underlying liquidity, or float percentage requirements, only the existence of qualifying futures contracts.

Among the eligible cryptocurrencies are Bitcoin, Ethereum, Solana, XRP, Cardano, Avalanche, Chainlink, Litecoin, Polkadot, Dogecoin, Stellar, and Shiba Inu.

Solana ETPs face an October 10 approval deadline, with XRP following shortly after as their respective futures contracts reach the six-month threshold.

The developments build on significant momentum in the crypto ETF space. Spot Bitcoin ETFs have accumulated $55.11 billion in cumulative inflows with $151.36 billion in assets under management.

Ethereum ETFs reached $21.5 billion in assets, representing 4.7% of Ethereum’s market capitalization, following 19 consecutive days of net inflows totaling over $9 billion.

Regulatory Framework Streamlines Approval Process

The CBOE’s Generic Listing Standards filing eliminates the traditional 19b-4 rule change process that previously required individual exchange applications for each crypto ETP.

Under the new framework, qualifying products could receive approval after a 75-day review period, dramatically reducing time-to-market for issuers.

The SEC voted on July 29 to approve in-kind creation and redemption mechanisms for crypto ETPs, allowing authorized participants to exchange shares for underlying cryptocurrencies rather than cash.

Chairman Paul Atkins emphasized the change would make products “less costly and more efficient” for investors.

The in-kind redemption model provides significant tax advantages for institutional investors by allowing them to defer capital gains until they choose to sell the received cryptocurrencies.

Previously, cash-only redemptions forced ETF issuers to sell underlying assets, triggering immediate tax consequences for shareholders.

The Commission also approved applications for mixed Bitcoin-Ethereum ETPs and expanded position limits for Bitcoin ETP options to 250,000 contracts.

Two scheduling orders were issued seeking public comment on large-cap crypto ETP listings previously approved under delegated authority.

Greg Xethalis identified September 17 as a critical date, marking six months after Solana futures launched on CME.

However, earlier certification on Bitnomial and NADEX could accelerate approval timelines if the Generic Listing Standards receive final approval or if the SEC acts independently on pending applications.

Market Dynamics Signal Institutional Adoption Surge

Institutional demand has accelerated despite ongoing regulatory developments. BlackRock’s IBIT recorded $147.36 million in inflows on July 28, leading spot Bitcoin ETFs to $157 million in total daily inflows.

Ethereum ETFs attracted $65.14 million the same day, with BlackRock’s ETHA contributing $131.95 million.

Corporate treasury adoption has expanded beyond Bitcoin. SharpLink Gaming became the largest corporate holder of Ethereum with 280,706 ETH worth approximately $840 million, surpassing the Ethereum Foundation.

Corporate treasuries purchased at least $1.6 billion worth of ETH in recent weeks, with companies actively participating in network staking for yield generation.

The approval pipeline includes 72 pending crypto ETF applications from major providers, including Grayscale, CoinShares, Franklin Templeton, and VanEck.

Bloomberg Intelligence assigns 95% approval odds for Solana, XRP, and Litecoin ETFs before year-end.

Notably, recent volatility included the SEC’s controversial approval and immediate reversal of Bitwise’s 10 Crypto Index ETF on July 22.

The fund would have tracked ten digital assets with 85% allocation to previously approved components like Bitcoin and Ethereum before Assistant Secretary Sherry Haywood issued a stay order under Rule 431.

The regulatory confusion extended to staking-enabled ETFs, where the SEC questioned whether REX Financial and Osprey Funds’ proposed C-corporation structures comply with the Investment Company Act.