Regulators Overhaul ETF Approval Timelines, Sparking New Hope for Digital Assets

The U.S. Securities and Exchange Commission (SEC) is preparing to streamline the approval process for exchange-traded funds (ETFs) through a proposed update to Rule 6c-11, which could significantly reduce the current average review time. Under the new framework, the processing period for ETF applications may be cut to as little as 75 days, compared to the existing standard of several months. This move aims to enhance market efficiency and accommodate the growing demand for innovative investment vehicles.

The proposed change is particularly significant for asset classes that have historically faced regulatory hurdles, such as cryptocurrency-based ETFs. One notable example is XRP, the token issued by Ripple Labs, which has been under regulatory scrutiny for years. With the potential for expedited reviews, the path for a spot XRP ETF could become more viable, subject to ongoing compliance and market readiness assessments.

Regulators have emphasized that the revised timeline would not compromise the quality of the evaluation process. Instead, it is expected to involve a more structured review mechanism, with clearly defined milestones and expectations for applicants. This structured approach could increase predictability for asset managers and institutional investors seeking to bring new ETF products to market.

The potential for accelerated approvals has been welcomed by several industry stakeholders, who view it as a positive step toward greater innovation and competition in the ETF space. Industry experts have noted that a faster, more transparent process could attract a broader range of products, including those targeting niche markets and alternative asset classes.

As of now, the SEC has not set a specific timeline for implementing the updated rule. However, market participants are closely monitoring any developments, particularly given the recent interest in digital assets and the broader shift toward tokenized investments. The successful launch of a spot XRP ETF, in particular, could serve as a test case for the regulatory approach to digital currencies and set a precedent for similar products in the future.