Regulators Rewrite the Rules for Crypto ETFs—Again

The U.S. Securities and Exchange Commission (SEC) has extended its review period for the 21Shares Spot SUI ETF, further delaying its decision on whether to approve or deny the fund. The move is part of a broader effort by the SEC to finalize generic listing standards for spot crypto ETFs in collaboration with major exchanges like Nasdaq, NYSE, and CBOE BZX. The regulatory body recently amended its procedures to allow for a more comprehensive evaluation of the proposed rule changes, which would govern how these products are listed and traded on U.S. markets. Nasdaq filed its application to list and trade the 21Shares SUI ETF on May 23 under a commodity-based trust shares rule, and the SEC has since initiated a formal proceeding to assess the proposal. Interested parties have been invited to submit their views and concerns regarding the proposal, signaling a transparent but time-consuming regulatory process [1].

The extension of the review period means the SEC has set a final deadline of December 21 for its decision, though there is speculation that the agency might approve the ETF alongside other altcoin ETFs as early as October. This delay has caused uncertainty in the market, with SUI's price reflecting the impact. Over the past 24 hours, SUI has declined by nearly 0.5%, trading at $3.33. The price movement has coincided with a drop in trading volume by 15%, which analysts suggest indicates reduced trader interest. Technical indicators also show the price remains below key moving averages, with the RSI at 45, suggesting potential for a rebound [1].

Amendments to the Commodity-Based Trust Shares ETP Generic Listing Standards have also been a focus of recent regulatory efforts. The exchanges have removed "excluded commodities" from the definition of "commodity" in the listing standard, a move intended to broaden the scope of eligible assets for ETFs. Nate Geraci, co-founder of the ETF Institute, has predicted that these rules could become effective by early October, a timeline supported by the SEC's approach to finalizing pending ETF applications. This suggests a coordinated effort among regulators and exchanges to streamline the approval process for future spot crypto ETFs [1].

The delay in the SUI ETF's approval has not only impacted the product's timeline but has also affected the broader market's perception of crypto ETF prospects. CoinGlass data reveals that while open interest in SUI futures dropped by 2% in the last 24 hours, it has partially rebounded by 0.75% on average across exchanges, indicating fluctuating sentiment among derivatives traders. The derivatives market remains a key area of activity for SUI, with the total open interest currently at $1.82 billion. This volatility underscores the speculative nature of the market and the sensitivity of crypto assets to regulatory developments [1].

The broader regulatory landscape for cryptocurrencies is also evolving rapidly. In Europe, the Markets in Crypto-Assets (MiCA) Regulation has been enacted to create a unified framework for digital assets across EU member states, aiming to protect investors and foster innovation. In the U.S., the recently signed GENIUS Act represents a significant but limited step toward regulating stablecoins, focusing on oversight and consumer protections for privately issued stablecoins. While the U.S. has yet to adopt a comprehensive regulatory approach similar to the EU's, the SEC's actions on the SUI ETF reflect a growing recognition of the need to address the unique challenges presented by crypto assets. These developments highlight a global trend toward increased oversight, with regulatory bodies seeking to balance innovation with investor protection [3].

Source:

[1] US SEC's Work on Generic Listing Rules Delays 21Shares ... (https://coingape.com/us-secs-work-on-generic-listing-rules-delays-21shares-sui-etf-approval/)

[2] 21Shares - Crypto for everyone. (https://www.21shares.com/en-eu)

[3] Crypto Rules in Europe vs. the US: Does Your Stablecoin ... (https://finance.yahoo.com/news/crypto-rules-europe-vs-us-184431208.html)