The US Securities and Exchange Commission’s move to simplify the approval process for crypto exchange-traded products (ETPs) could spark a wave of new launches, but their success is far from guaranteed, a crypto executive has cautioned.
“The adoption of generic listing standards — which could come as early as October — will likely usher in a flood of new crypto ETPs. This is intuitive, but it’s also backed up by ETF history,” Bitwise chief investment officer Matt Hougan said in a report on Monday.
Hougan stressed, however, that a product’s debut doesn’t automatically translate into market demand.
Crypto ETFs’ presence ≠ guaranteed inflows
“The mere existence of a crypto ETP does not guarantee significant inflows. You need fundamental interest in the underlying asset,” Hougan noted.
He added that funds based on weaker assets, such as Bitcoin Cash, are unlikely to attract much attention unless the tokens themselves regain momentum.
Still, Hougan emphasized that ETFs can act as a crucial bridge, positioning crypto products to benefit when market fundamentals improve, since they make it easier for traditional investors to gain exposure.
In February, Sygnum research head Katalin Tischhauser made a similar point, telling Cointelegraph that while excitement over crypto ETFs is high, “no one can point to where substantial demand is going to come from.”
This week, two new altcoin ETFs — tracking XRP and Dogecoin — are expected to launch in the US.
On July 3, the US’ first Solana staking ETF closed its debut session with $12 million in inflows — a result Bloomberg ETF analyst James Seyffart described as a “healthy start to trading.”
At present, the SEC reviews spot crypto ETF proposals individually, requiring issuers to demonstrate that the underlying market is liquid, resistant to manipulation, and meets other strict standards. The process can take as long as 240 days and still carries no guarantee of approval.
New framework could make approvals “virtually guaranteed”
Under the revised system being developed, crypto ETF applications that meet defined criteria would be “virtually guaranteed” approval, Bitwise CIO Matt Hougan noted. He added that the timeline would also shorten significantly, with decisions made in 75 days or less.
Meanwhile, Bitfinex analysts said on Aug. 26 that a broader altcoin rally is unlikely until crypto ETFs expand to cover assets further down the risk curve.
