Ethereum News Today: SEC Streamlines Crypto ETP Approval, Paving Way for 12 Major Tokens by October

The U.S. Securities and Exchange Commission (SEC) has established new listing standards for cryptocurrency exchange-traded products (ETPs), which could pave the way for approximately a dozen major digital assets to gain ETF approval by October [1]. This development is outlined in the CBOE’s Generic Listing Standards framework, which states that any cryptocurrency with futures contracts trading on designated markets for at least six months will automatically qualify for ETP listing [2].

Under the new rules, an issuer’s shares can be listed on an exchange if the underlying commodity has a contract on a Designated Contract Market for at least six months. This effectively shifts the approval authority to the Commodity Futures Trading Commission (CFTC), which oversees futures market designations [1]. Analysts, including Eric Balchunas, have noted that the eligible tokens include well-known cryptocurrencies such as Bitcoin, Ethereum, Solana, XRP, Cardano, Avalanche, Chainlink, Litecoin, Polkadot, Dogecoin, Stellar, and Shiba Inu [2].

The framework does not impose specific market capitalization, liquidity, or float percentage requirements, focusing solely on the existence of qualifying futures contracts [1]. For example, Solana ETPs face an October 10 approval deadline, as their futures contracts are expected to meet the six-month threshold by that date. XRP is anticipated to follow shortly after [2].

The regulatory shift eliminates the need for the traditional 19b-4 rule change process, which previously required individual exchange applications for each crypto ETP. Instead, qualifying products could now be approved within 75 days, significantly reducing time-to-market for issuers [1]. On July 29, the SEC also approved in-kind creation and redemption mechanisms for crypto ETPs, allowing authorized participants to exchange shares for underlying cryptocurrencies rather than cash [2].

This mechanism provides notable tax advantages for institutional investors by enabling them to defer capital gains until they choose to sell the received cryptocurrencies [1]. Previously, cash-only redemptions forced ETF issuers to sell underlying assets, triggering immediate tax consequences for shareholders [2]. The Commission also approved applications for mixed Bitcoin-Ethereum ETPs and increased position limits for Bitcoin ETP options to 250,000 contracts [2].

The SEC’s actions have accelerated institutional demand in the market. On July 28, BlackRock’s IBIT recorded $147.36 million in inflows, leading spot Bitcoin ETFs to $157 million in total daily inflows. Ethereum ETFs attracted $65.14 million the same day, with BlackRock’s ETHA contributing $131.95 million [1].

Corporate adoption has also expanded beyond Bitcoin. SharpLink Gaming has become the largest corporate holder of Ethereum with 280,706 ETH, valued at approximately $840 million, surpassing the Ethereum Foundation [1]. Corporate treasuries have purchased at least $1.6 billion worth of ETH in recent weeks, with companies actively participating in network staking for yield generation [2].

The approval pipeline includes 72 pending crypto ETF applications from major providers, including Grayscale, CoinShares, Franklin Templeton, and VanEck. Bloomberg Intelligence assigns 95% approval odds for Solana, XRP, and Litecoin ETFs before year-end [2]. However, recent regulatory confusion included the SEC’s controversial approval and immediate reversal of Bitwise’s 10 Crypto Index ETF on July 22. The fund would have tracked ten digital assets with 85% allocation to previously approved components like Bitcoin and Ethereum before Assistant Secretary Sherry Haywood issued a stay order under Rule 431 [2].

The regulatory landscape for crypto ETPs continues to evolve, with the SEC’s latest measures streamlining the approval process while introducing new complexities related to staking-enabled ETFs. The Commission has raised questions about whether proposed C-corporation structures by REX Financial and Osprey Funds comply with the Investment Company Act [2].

[1] Source: [1] SEC Sets New Crypto ETF Standards, Dozen Major Tokens Could Qualify by October (https://cryptonews.com/news/sec-sets-new-crypto-etf-standards-dozen-major-tokens-could-qualify-by-october/)