SEC Speeds Up Bitcoin ETF Approval Process By 68%

The U.S. Securities and Exchange Commission (SEC) is reportedly in the process of drafting a new framework designed to expedite the approval process for Bitcoin exchange-traded funds (ETFs). This initiative comes at a time when the SEC is dealing with a backlog of over 50 crypto ETF applications awaiting regulatory approval. The new framework is intended to streamline the review process, potentially reducing the time from filing to launch from 240 days to as few as 75 days.

The SEC's recent guidance on disclosure requirements for crypto-based ETFs signifies a notable shift in the regulator's approach to the crypto sector. The 12-page document provides clear expectations for issuers, mandating that they address all distinctive factors of crypto-based ETFs in plain language. This includes details on custody arrangements and the risks associated with the highly competitive landscape of cryptocurrencies.

Industry participants view this guidance as a positive step towards the mainstream acceptance of crypto ETFs. The SEC's move to create a universal listing standard is seen as an effort to save both issuers and SEC staff time and resources. The next phase of the SEC's plan involves developing a new listing template that would replace the current need for exchanges to submit a special form for each new crypto product. This template is expected to be submitted by exchanges in the coming days or weeks.

The new framework is anticipated to accelerate the pace of new product debuts, with industry insiders expecting the next batch of crypto products to be tied to Solana, the world's sixth-largest cryptocurrency. However, the launch of these products is likely to be delayed until after the SEC rolls out the second part of its guidance, pushing the timeline into early autumn.

Some asset managers are already taking proactive steps to launch crypto ETFs. Last week, REX Financial and Osprey Funds launched the first U.S. ETF providing exposure to Solana through a more indirect approach. This ETF invests in a separate entity that owns both Solana and a non-U.S. Solana fund, allowing it to bypass current commodity fund rules and offer investors access to yield through the cryptocurrency staking mechanism.

The SEC's new guidance and the anticipated framework represent a significant move towards regulating the crypto sector more effectively. While the process is still evolving, industry participants are optimistic about the potential for faster approvals and increased market entry for crypto ETFs. The SEC's efforts to create a more streamlined and efficient approval process are expected to benefit both issuers and investors, fostering greater innovation and competition in the crypto ETF market.