SEC Sets 6-Month Futures Exposure Requirement for Crypto ETP Listings

The U.S. Securities and Exchange Commission (SEC) has introduced new listing standards for crypto asset Exchange Traded Products (ETPs), requiring underlying digital assets to demonstrate at least six months of futures exposure on a Designated Contract Market. This regulatory shift is aimed at ensuring sufficient market maturity and robust surveillance to protect investors and reduce the risk of price manipulation [1].

The Chicago Board Options Exchange (CBOE) has submitted a list of 18 tokens that meet the new SEC criteria, including Litecoin (LTC), Dogecoin (DOGE), Polkadot (DOT), Avalanche (AVAX), Solana (SOL), and Cardano (ADA). These tokens have maintained futures contracts on Coinbase’s derivatives exchange for over six months, making them eligible for ETP listings [1]. Bloomberg ETF analyst Eric Balhunas noted that these standards align with market expectations and are expected to facilitate the listing of major tokens on U.S. exchanges by late 2025 [1].

The new criteria emphasize the importance of futures exposure and surveillance agreements in ensuring market integrity. For a crypto asset to be eligible for an ETP listing, it must have a minimum of six months of futures trading on a Designated Contract Market. Additionally, the exchange offering the ETP must have comprehensive surveillance sharing agreements with the designated markets to monitor trading activities and prevent fraud [1].

This development reflects a growing regulatory focus on transparency and investor protection in the crypto market. Previously, the SEC approved in-kind creation and redemption processes for spot Bitcoin (BTC) and Ethereum (ETH) ETFs, allowing shares to be created or redeemed using the underlying crypto assets rather than cash. This process benefited major issuers such as BlackRock, Fidelity, Ark Invest, and VanEck, and applied to exchanges including Nasdaq, NYSE Arca, and Cboe BZX [1].

The introduction of the new SEC listing standards is expected to streamline the approval process for crypto ETPs, signaling increasing regulatory clarity and institutional acceptance of digital assets. The rules ensure that only well-established tokens with sufficient market data and surveillance are listed, reducing risks for investors and enhancing confidence in the market [1].

According to the CBOE filing, the proposed rules would allow an issuer’s shares to be listed on an exchange if the underlying digital asset has a contract on a Designated Contract Market for a minimum of six months. This requirement is intended to ensure that the asset has demonstrated sufficient liquidity and market depth before being offered to the public [1].

Balhunas noted that the list of approved tokens aligns with market predictions that gave around 85% odds to these same coins being the first approved under the modern SEC rules. These tokens are expected to debut on U.S. exchanges in late 2025, marking a significant step toward mainstream adoption of crypto ETPs [1].

The SEC’s approach to crypto ETPs continues to evolve, with a focus on balancing innovation with investor protection. The new standards reflect a broader trend of regulatory engagement with the crypto industry, aimed at fostering trust and enabling institutional participation without compromising market integrity [1].

Source:

[1] SEC Considers New Listing Standards for Litecoin and Other Crypto ETPs with Futures Exposure Criteria

https://en.coinotag.com/sec-considers-new-listing-standards-for-litecoin-and-other-crypto-etps-with-futures-exposure-criteria/