SEC Rule Changes Could Spark Wave of Crypto ETFs, But Success Not Assured: Bitwise

     

Streamlined listing process may boost ETF launches, though investor demand remains uncertain

The US Securities and Exchange Commission’s plan to simplify the approval process for crypto exchange-traded products (ETPs) could pave the way for a surge of new funds, but that doesn’t mean they’ll attract meaningful inflows, according to Bitwise.

“The adoption of generic listing standards – which could come as early as October – will likely usher in a ton of new crypto ETPs. This is intuitive, but it’s also backed up by ETF history,” said Matt Hougan, Bitwise’s chief investment officer, in a report on Monday.

Hougan cautioned that launching a crypto ETF should not be mistaken for growing investor demand in digital assets.

ETFs’ existence no guarantee of inflows

“The mere existence of a crypto ETP does not guarantee significant inflows. You need fundamental interest in the underlying asset,” Hougan explained. He added that products built around assets like Bitcoin Cash could struggle unless the tokens themselves see renewed adoption.

Still, he noted that ETFs position crypto for potential rallies once fundamentals shift, as they make allocating capital simpler for traditional investors.

The caution echoes earlier comments from Sygnum’s Katalin Tischhauser, who warned of “frothy excitement” around ETF launches without clear signs of strong demand.

This week, two new US-listed ETFs tracking XRP and Dogecoin are expected to go live. Meanwhile, the Solana staking ETF that launched July 3 ended its first day with $12 million in inflows – which Bloomberg ETF analyst James Seyffart described as a “healthy start.”

New rules could make approval faster and more predictable

Currently, the SEC reviews spot crypto ETFs individually, often taking up to 240 days with no assurance of approval.

Under the proposed changes, applications would be “virtually guaranteed” if they meet strict criteria, with reviews capped at 75 days, Hougan said.

Analysts at Bitfinex noted in late August that altcoins may not see widespread rallies until ETF products broaden access further down the risk curve.