Key Takeaways:
- The SEC is set to implement generic listing rules, which could reduce cryptocurrency ETF approval times to 75 days or fewer.
- Bitwise CIO Matt Hougan cautions that “the mere existence of a crypto ETP does not guarantee significant inflows” unless there is strong demand for the underlying asset.
- New laws may result in an increase in altcoin ETFs, with XRP and Dogecoin funds set to launch in the United States this week.
The U.S. Securities and Exchange Commission (SEC) is preparing to streamline the approval process for crypto exchange-traded products (ETPs), a move that could open the floodgates for new offerings. However, experts warn that quantity does not guarantee investor demand.
Bitwise Chief Investment Officer Matt Hougan explained in a recent report that adopting generic listing standards expected as early as October would “likely usher in a ton of new crypto ETPs.” He added that ETF history supports this view, with easier listings leading to more products on the market.
Still, Hougan emphasized that the launch of an ETF is not the same as market enthusiasm for the asset itself. “The mere existence of a crypto ETP does not guarantee significant inflows. You need a fundamental interest in the underlying asset,” he noted, pointing to assets like Bitcoin Cash that may struggle to attract capital without renewed relevance.
Why It Matters for Crypto Markets
Under the current system, each crypto ETF proposal is reviewed individually, a process that can stretch up to 240 days with no guarantee of approval. The new framework would cut this time to 75 days or less, with approval “virtually guaranteed” if strict requirements are met. This change could clear the path for funds tied to altcoins like XRP and Dogecoin, with two such ETFs expected to launch in the U.S. this week.
Hougan stressed, however, that ETFs become most impactful when fundamentals shift. Easier access through ETFs allows traditional investors to allocate quickly once confidence returns, but in the absence of demand, many products could remain underutilized.
A Broader Market Picture
Recent history highlights this tension. The first Solana staking ETF in the U.S. debuted in July with $12 million in day-one inflows, a figure Bloomberg analyst James Seyffart described as “healthy,” but far from transformative.
For now, the SEC’s upcoming changes represent a pivotal moment. If implemented, the crypto ETF landscape could diversify rapidly. But as Hougan concluded, long-term success will depend less on regulatory shortcuts and more on whether investors see real value in the underlying assets.
