The Ongoing Battle for Crypto ETF Approval
For many years, the quest for the approval of crypto exchange-traded funds (ETFs) has been a significant point of contention within the realm of financial regulations. The initial requests for a Bitcoin (BTC) ETF can be traced back over ten years. It wasn’t until early 2024, following numerous rejections and a legal challenge that compelled the US Securities and Exchange Commission (SEC) to reevaluate, that spot Bitcoin ETFs finally received the green light in the United States. This lengthy journey highlighted the regulatory caution, political scrutiny, and the intricate nature of digital asset markets.
A Shift in Regulatory Landscape
Fast forward to today, and the discussion surrounding crypto ETFs has evolved considerably. The SEC is currently reviewing proposals from Nasdaq, NYSE Arca, and Cboe BZX that aim to establish standardized listing criteria for crypto and commodity-based ETFs. If these regulations are approved, qualifying funds would be able to list without needing specific SEC approval under SEC Rule 19b-4. Such a move would bring crypto ETFs in line with traditional ETFs, which have benefited from their own generic framework established under Rule 6c-11 in 2019. This indicates that crypto ETFs are on the verge of transitioning from being treated as exceptions to becoming a part of the mainstream investment landscape.
The Importance of Generic Listing Standards
The current process for obtaining approval for crypto ETFs is notoriously complex. Each new application can take 240 days or more, involving extensive public commentary, staff evaluations, and often significant uncertainty. The introduction of generic listing standards would streamline this process, reducing timelines to approximately 60-75 days, thereby facilitating the introduction of new products to the market. This increased speed and efficiency would positively impact every facet of the crypto sector.
To date, only Bitcoin and Ether (ETH) ETFs have successfully navigated the regulatory hurdles. The establishment of generic standards could pave the way for ETFs linked to other cryptocurrencies, such as Solana (SOL), XRP (XRP), and Dogecoin (DOGE), as well as more innovative offerings like staking-linked products or thematic baskets. By implementing clear eligibility requirements, such as mandating a minimum of six months of trading history on Commodity Futures Trading Commission-regulated futures markets, these rules would ensure that only sufficiently mature tokens qualify while still expanding options for investors.
ETFs as a Means of Transparency in Crypto
Critics frequently argue that ETFs contribute to the financialization of cryptocurrency. However, it is essential to recognize that ETFs provide the transparency, custody protections, and surveillance measures that regulators have long sought. By packaging digital assets within an ETF framework, investors benefit from enhanced disclosures, standardized creation and redemption processes, and oversight from regulated exchanges. This structure offers a much safer and clearer path for investors compared to offshore exchanges or unregulated platforms.
The United States has lagged in terms of regulatory clarity for cryptocurrencies. In contrast, the EU’s Markets in Crypto-Assets framework, Hong Kong’s licensing system, and Singapore’s capital markets strategy all offer more predictable pathways for digital asset products. If the SEC proceeds with the approval of generic listing standards, it will signal the US’s commitment to leading the integration of digital assets into regulated markets rather than falling behind.
Looking Ahead: The Future of Crypto ETFs
The SEC may reach a decision by September 2025. If these proposals receive approval, exchanges could potentially list the first series of altcoin ETFs before the year’s end. This development would help alleviate a backlog of nearly 100 pending applications and lay the groundwork for innovative products, including index funds, thematic baskets, and hybrid ETFs that combine cryptocurrencies with equities or commodities.
The SEC has already initiated steps to prepare for this shift. In August 2025, it approved in-kind creation and redemption processes for crypto ETFs, aligning them more closely with norms for commodity funds and reducing costs. This decision indicated a recognition that operational efficiency can coexist with investor protection. Establishing generic listing standards is a logical progression from this point.
The Necessity of Thoughtful Regulation
Critics may contend that cryptocurrencies should not receive the same regulatory treatment as traditional assets. However, the goal of regulation should not be to judge the value of asset classes but to create transparent and consistent rules that safeguard investors and maintain market integrity. Postponing the integration of crypto only exacerbates risks. Without access to regulated products, investors may be driven towards less secure alternatives, including exchanges with inadequate custody controls, offshore platforms outside US jurisdiction, or illiquid private placements. In contrast, ETFs would bring cryptocurrencies into a regulated environment, allowing for proper monitoring, disclosure, and supervision akin to any other financial instrument.
Maintaining US Leadership in Market Innovation
The adoption of Rule 6c-11 in 2019 revolutionized the ETF industry by encouraging innovation and lowering entry barriers for issuers. A similar opportunity now presents itself for the cryptocurrency market. Approving generic listing standards would not endorse any specific token or project; instead, it would create a reliable framework for regulated exchanges and issuers to navigate.
Cryptocurrency is not a passing trend. The critical question is whether investors will be able to access it through transparent, regulated products within the US markets or through less clear channels abroad. The SEC’s decision on generic listing standards will play a vital role in shaping that future. For the US to maintain its status as a global center of innovation within capital markets, it is essential to fully integrate crypto ETFs into the mainstream ETF framework.
