Cboe and NYSE Arca Propose Rule to Automate Crypto ETF Listings

Cboe and NYSE Arca have jointly submitted a proposal to the U.S. Securities and Exchange Commission (SEC) to establish a pre-approved rule that would streamline the listing of cryptocurrency ETFs [1]. The initiative aims to shift from the current individual approval process to a rule-based system that would allow eligible crypto ETFs to be listed automatically, thereby accelerating market entry and reducing regulatory bottlenecks [2]. This change would align the treatment of crypto ETFs with that of traditional ETFs and could significantly increase the availability of crypto investment products.

Under the proposed rule, crypto ETFs would need to meet specific eligibility criteria to qualify for automatic approval. These include a minimum six-month track record of regulated futures trading for the underlying asset and, for funds with more than 15% of assets not instantly redeemable, a liquidity risk management plan [1]. These conditions apply to both spot and staking-enabled ETFs, offering broader flexibility for product design and potentially expanding the range of available crypto offerings.

The proposal has received favorable reactions from industry analysts, who see it as a step toward reducing regulatory friction and encouraging innovation in the crypto space. Nate Geraci, President of ETF Store, emphasized that the rule could make the ETF approval process more efficient and standardized [1]. Similarly, Eric Balchunas of Bloomberg Intelligence has suggested that the change could facilitate the approval of multiple crypto ETFs by the end of 2025 [1]. With Nasdaq reportedly considering similar submissions, the industry appears to be moving toward a consensus on the need for regulatory modernization.

From an investor perspective, the potential benefits of the proposed rule are substantial. By reducing the time and cost associated with launching a crypto ETF, the change could attract a broader range of issuers and lead to greater product diversity. This, in turn, would enhance accessibility for retail and institutional investors seeking exposure to digital assets in a regulated and familiar format [1]. The availability of more crypto ETFs is expected to also improve market liquidity and encourage mainstream adoption of cryptocurrencies.

The shift to a rule-based system marks a significant regulatory evolution in the U.S. crypto landscape. Historically, the SEC’s case-by-case review process has contributed to delays and limited the development of crypto products. The proposed framework, by establishing clear and objective criteria, seeks to create a more transparent and efficient approval mechanism. If adopted, the rule would not only benefit ETF issuers but also signal the SEC’s recognition of the growing legitimacy and complexity of the crypto market [1].

The next steps in the process will depend on the SEC’s evaluation of the proposal and its consideration of public and expert feedback. While the timeline remains uncertain, the growing industry support and the momentum behind the proposal suggest that approval could be on the horizon. If implemented, the new framework could transform the U.S. crypto investment landscape, making it easier for investors to access a broader range of digital assets and encouraging further innovation in the sector [1].

Source:

[1] CBOE Proposes Automatic Bitcoin ETF Listings to Potentially Streamline SEC Approval Process (https://en.coinotag.com/cboe-proposes-automatic-bitcoin-etf-listings-to-potentially-streamline-sec-approval-process/)

[2] Cboe, NYSE Arca move to streamline crypto ETF listings with SEC rule change request (https://www.mexc.com/news/cboe-nyse-arca-move-to-streamline-crypto-etf-listings-with-sec-rule-change-request/63016)