Bitcoin News Today: Regulators Face Pressure as Altcoin ETFs Flood the SEC Pipeline

21Shares, a leading crypto asset manager, has filed with the U.S. Securities and Exchange Commission (SEC) for approval to launch an exchange-traded fund (ETF) tracking the native token of the Sei network, SEI. The S-1 registration statement, submitted on Thursday, outlines the firm’s intention to use CF Benchmarks as the price reference provider, leveraging data from multiple crypto exchanges to track the token’s price performance [1]. The Sei network, a layer 1 blockchain launched in August 2023, is designed to optimize trading infrastructure for decentralized exchanges and marketplaces [1]. The SEI token facilitates gas fee payments and governance within the network.

Coinbase Custody Trust Company is designated as the custodian for SEI holdings, with 21Shares also exploring the potential for staking the token to generate additional returns. However, the firm has emphasized that it is still assessing whether such staking activities would pose any undue legal, regulatory, or tax risks [1]. The proposed ETF aims to offer investors exposure to SEI while exploring the possibility of generating passive income through staking rewards [2]. This aligns with broader industry efforts to expand crypto ETF offerings beyond Bitcoin and Ethereum, which have already seen regulatory approval.

The Sei ETF filing comes amid growing interest from institutional and retail investors in altcoin exposure. 21Shares, which already manages the ARK 21Shares Bitcoin ETF, is among several firms vying for SEC approval for ETFs tracking tokens such as SUI, XRP, and Ondo Finance’s native token [1]. Other applications, including one from Canary Capital for an SEI ETF filed in April, highlight the competitive landscape and growing regulatory focus on altcoin ETFs [1]. The firm’s CEO, Krishnendu Chatterjee, stated that the approval of such funds could become a new normal, particularly for tokens like XRP, Solana, and Avalanche (AVAX), with a high likelihood of approval by year-end [2].

The SEC, which has been reviewing multiple altcoin ETF applications, is reportedly considering a streamlined approval process. Under this proposed system, the standard SEC form S-1 would trigger a 75-day review period, with automatic approval if no formal objections are raised [1]. This shift could expedite the approval timeline for firms like 21Shares, whose application joins a growing pile of altcoin ETF proposals, including those for Solana, Dogecoin, and Cardano [2]. While the SEC has yet to approve staking for ETFs, recent statements from its Division of Corporation Finance indicated that certain staking activities do not involve the offering of securities, potentially signaling a more favorable regulatory environment [4].

Industry observers note that the success of Bitcoin and Ethereum ETFs has set a precedent for new digital asset products. The approval of an SEI ETF could further bridge the gap between traditional finance and the crypto market, as highlighted by Justin Barlow, executive director of the Sei Development Foundation. He emphasized that ETFs serve as a vital gateway for broader adoption, offering a structured and regulated avenue for investors to participate in the crypto ecosystem [1]. The market response to SEI has been positive, with the token currently trading at $0.30 and ranked 74th in terms of market capitalization [1]. Analysts suggest that the approval of the 21Shares SEI ETF could enhance liquidity and institutional interest in the token, reinforcing its position in the broader crypto market.

Source: [1] Crypto Asset Manager 21Shares Files for Spot SEI ETF (https://cointelegraph.com/news/21shares-files-sei-etf-sec-filing-crypto-staking) [2] 21Shares Seeks Launch of SEI ETF With Potential Staking ... (https://finance.yahoo.com/news/21shares-seeks-launch-sei-etf-053425300.html) [4] 21Shares files for Sei ETF with possible staking as SEC ... (https://www.theblock.co/post/368732/21shares-files-for-sei-etf-with-possible-staking-as-sec-reviews-altcoin-funds)