SEC Leans on CFTC and Coinbase Derivatives to Qualify Spot Crypto ETFs

The U.S. Securities and Exchange Commission (SEC) is reportedly shifting its approach to approving spot cryptocurrency exchange-traded funds (ETFs) by relying on the Commodity Futures Trading Commission (CFTC) and Coinbase’s derivatives market to determine eligibility [1]. This change suggests that digital assets with a minimum of six months of trading activity on Coinbase will automatically qualify for inclusion in spot ETFs, effectively centralizing the decision-making power in the hands of Coinbase and the CFTC [3].

The proposed framework eliminates the need for the SEC to impose additional requirements such as market capitalization or liquidity benchmarks at this stage, focusing instead on the maturity of a token’s futures market [2]. This approach leverages the CFTC’s regulatory oversight of commodity futures and Coinbase’s dominance in U.S. crypto derivatives, which the SEC may view as a more reliable and comprehensive benchmark than existing futures markets [1].

Tokens such as Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), XRP, Dogecoin (DOGE), and others that have maintained active futures trading for six months on Coinbase are likely to be the first to benefit from this new standard [1]. However, newer or speculative tokens that lack a well-established futures market, such as Bonk and Trump Coin, may still face significant hurdles and would need to pursue a more complex regulatory route under the Investment Company Act of 1940 [1].

This regulatory shift is expected to streamline the approval process for spot crypto ETFs, reducing uncertainty for issuers and potentially encouraging broader institutional participation in the crypto asset class [2]. By aligning eligibility criteria with established market infrastructure, the SEC appears to be prioritizing transparency, market integrity, and investor protection [3].

The impact of this policy remains to be seen, as its effectiveness will depend on how Coinbase and the CFTC interpret and apply the guidelines in practice. Nonetheless, the move signals a growing recognition of crypto’s integration into traditional financial markets and may pave the way for further innovation in crypto-related investment products [1].

Sources:

[1] CryptoSlate: [New SEC standard leans on CFTC and Coinbase to decide which digital assets get spot crypto ETFs](https://cryptoslate.com/new-sec-standard-leans-on-cftc-and-coinbase-to-decide-which-digital-assets-get-spot-crypto-etfs/)

[2] CryptoRank: [SEC's "Listing Standards" for crypto ETPs is out, coins trading on Coinbase for 6 months are eligible](https://cryptorank.io/news/feed/50b74-secs-listing-standards-for-crypto-etps-out)

[3] CoinMarketCal: [New SEC standard leans on CFTC and Coinbase to decide which digital assets get spot crypto ETFs](https://coinmarketcal.com/en/pastevents)