Key Takeaways
- The U.S. SEC has urged crypto ETF Issuers to withdraw their 19b-4 filings.
- The change comes in lieu with the agency approving the General Listing Standards earlier this month.
- Now, ETF Issuers just have to file the Form S-1 to apply for the listing of an exchange-traded fund.
The U.S. Securities and Exchange Commission (SEC) has directed several issuers of crypto exchange-traded funds (ETFs) to retract their pending 19b-4 forms. The directive follows a regulatory change at the beginning of the month, which may speed up the deployment of digital asset funds, involving Ripple’s XRP, Solana (SOL), Cardano (ADA), Dogecoin (DOGE), Litecoin (LTC), and Hedera (HBAR).
Why Did SEC Ask Crypto ETF Issuers to Withdraw 19b-4 Filings?
At the beginning of September, the SEC passed new generic listing standards. These regulations will allow the national securities exchanges to add commodity-based exchange-traded products (ETPs), including those that track cryptocurrencies, without having to individually review each new product. By the old model, any crypto ETF was required to file two documents: a 19b-4 filing by the exchange itself and an S-1 registration filing by the issuer.
The 19b-4 process that has long been viewed as a bottleneck compelled exchanges, including Nasdaq and NYSE Arca, to seek SEC approval to change their listing rules every time a new crypto ETF was being floated. Some categories of products do not require that step anymore and this can save months off the schedule.
Today, issuers merely have to file an S-1, which outlines the structure and investment strategy of the ETF, before commencing trading. Per FOX journalist Eleanor Terrett, XRP, SOL, ADA, LTC, HBAR, and DOGE ETF Issuers are expected to withdraw their 19b-4 Filings as early as this week.
The simplified manner of operation, according to Bloomberg Intelligence analyst James Seyffart, might result in unusually fast-tracked decisions. “The SEC can move absurdly fast if they really want to – as we’ve seen in the past. Meaning that we could see approvals in a matter of days. But there’s no guarantee of that,” he explained, according to a CoinDesk report.
What’s Next in Store for Crypto ETFs?
Unresolved applications were cited by Seyffart as an indication that the agency could still proceed slowly. “They still haven’t greenlit Bitwise’s BITW to convert into an ETF, which I’m guessing has to do with the first to file aspect that the SEC typically follows for the rest of the ETF industry,” he said. Seyffart added, “So perhaps they’ll allow these things to launch in sorts of rolling waves, or it could be a shotgun start by underlying asset.”
In recent months, a broad variety of spot crypto ETF filings have been made by asset managers, including Solana, Litecoin, and Dogecoin tokens. Applications that used to combine the two stages of approval, 19b-4 and S-1 paperwork, were used to reflect that.The new position of the SEC also changes the entire focus to S-1. Although that form still needs to be scrutinized by the regulator, it takes the exchanges out of the rule-change process and puts power in the hands of the Commission.
Although the rule has changed, market players still do not know when to expect it. “Everything is uncertain. Then there is the threat of a government shutdown, and it can get pretty wonky, Seyffart said.
Read More: Spot XRP ETF Decision Hangs on SEC’s October Clock: What’s in Store?
