SEC Approves Rule Changes for More Crypto Products, Fostering Innovation and Investor Choice

The SEC has approved rule changes that will lead to more cryptocurrency-related exchange-traded products, such as ETFs, in the US. This is expected to increase the supply of these products, following the successful launch of spot bitcoin and ethereum ETFs earlier this year. The SEC's decision has been welcomed by advisors, with 53% of those surveyed saying it has changed their attitude towards investing in bitcoin. Two new ETFs, REX-Osprey DOGE and XRP, have been launched, offering spot exposure to dogecoin and XRP.

The Securities and Exchange Commission (SEC) has approved rule changes that will lead to an increased supply of cryptocurrency-related exchange-traded products (ETPs) in the U.S. This development is expected to accelerate the launch of new ETFs, following the successful introduction of spot Bitcoin and Ethereum ETFs earlier this year. The SEC's decision has been well-received by advisors, with 53% of those surveyed reporting a change in their attitude towards investing in Bitcoin SEC Approves Generic Listing Standards for Crypto ETPs^[1].

The new rule changes allow national securities exchanges to list and trade qualifying ETPs holding spot commodities without undergoing the previously mandatory individualized SEC rule filing process under Section 19(b) of the Securities Exchange Act of 1934. This streamlined approach will significantly reduce the approval timeline for these products, from many months to as little as 60-75 days SEC Approves Standards That Could Lead to a Flurry of ...^[2].

The SEC's "rational, rules-based approach" introduces several paths for a digital asset or commodity to qualify for listing. Specifically, a product must either trade on a market with Intermarket Surveillance Group membership and surveillance-sharing agreements, underlie a CFTC-regulated futures contract traded for at least six months, or be tracked by an existing exchange-traded fund (ETF) with no less than 40 percent of its net asset value exposed to the commodity and listed on a national securities exchange .

The approval of these new listing standards is expected to facilitate the launch of additional cryptocurrency ETFs. Two new ETFs, REX-Osprey DOGE and XRP, have already been launched, offering spot exposure to Dogecoin and XRP, respectively. The streamlined process is anticipated to make more cryptocurrencies available to investors in an ETF wrapper, potentially leading to a surge in new offerings .

While the SEC emphasizes that investor protections remain intact through regulatory oversight and required risk disclosures, some industry participants have expressed concerns about the risks associated with introducing newer asset classes to public markets without individualized review . Nevertheless, the approval signals a shift toward a more streamlined, transparent, and efficient rules-based listing process that offers both clarity and opportunity for market participants.

The SEC's approval of the New Listing Standards comes as part of its broader Project Crypto initiative to modernize digital asset regulation. This initiative aims to provide regulatory clarity and facilitate the growth of digital asset markets while ensuring investor protection .