Crypto ETFs to Overtake Precious Metals in North America

State Street Bank, a leading global financial institution, has predicted that the surging demand for cryptocurrency exchange-traded funds (ETFs) will drive their total assets in North America to surpass those of precious metal ETFs within the next year. This would make cryptocurrency ETFs the third-largest asset class in the fast-growing $15 trillion ETF industry, trailing only stocks and bonds.

Frank Koudelka, Global Head of ETF Solutions at State Street Bank, attributed this growth to the increasing interest from advisors in incorporating cryptocurrency into their portfolios. Despite a recent sell-off in the crypto market, a spot cryptocurrency ETF approved for listing in the U.S. last year has already attracted $136 billion in assets.

State Street Bank also anticipates that the U.S. Securities and Exchange Commission (SEC) will approve more digital asset ETFs this year. The bank expects funds based on the top ten tokens by market value to be listed by 2025. Furthermore, the bank predicts that the SEC will approve a "physical" creation and redemption mechanism for cryptocurrency ETFs, which would enhance trading efficiency.

This prediction comes as the cryptocurrency market continues to gain mainstream acceptance and institutional investors increasingly allocate a portion of their portfolios to digital assets. As the regulatory environment becomes more favorable, the demand for cryptocurrency ETFs is expected to grow, potentially surpassing that of precious metal ETFs within the next year.