tl;dr
The SEC is working with US exchanges to create a generic listing framework for token-based ETFs, allowing sponsors to use Form S-1 and undergo a standard 75-day review instead of filing individual Form 19b-4 rule-change requests. The framework will consider metrics like market capitalization, tradin...
The Securities and Exchange Commission (SEC) is collaborating with US exchanges to develop a generic listing framework for token-based exchange-traded funds (ETFs), aiming to streamline the approval process. This initiative would allow ETF sponsors to bypass the traditional Form 19b-4 rule-change requests, instead submitting a registration statement on Form S-1 and waiting through a standard 75-day review period before listing their product.
Key metrics under discussion for this new framework include market capitalization, on-exchange trading volume, and daily liquidity. Currently, each spot crypto ETF must obtain a specific Commission order before listing, a procedure intended for novel or complex products. Establishing a standing rule for qualifying assets could significantly shorten timelines and reduce the back-and-forth between regulators and applicants.
Bloomberg ETF analysts have welcomed the move, describing it as "very good news" for the crypto ETF space, providing much-needed clarity and regulatory certainty. Senior analyst Eric Balchunas expressed confidence that such a framework is what the market desires and anticipates, with thresholds likely set to accommodate most of the top 50 cryptocurrencies for ETF inclusion. He also suggested that this framework could foster the creation of multi-asset portfolios and staking-based ETFs, similar to proposals seen with Solana.
Momentum in the ETF market is growing, with Bloomberg analysts forecasting a surge in multi-asset index and basket ETFs in the second half of the year, including funds for Dogecoin, Cardano, Polkadot, and Avalanche. This aligns with the recent SEC approval for the Grayscale crypto basket fund's conversion into an ETF. Moreover, approval odds for Solana, Litecoin, and XRP ETFs have been raised to 95% by 2025, supported by increasing institutional interest and a US administration favorable to cryptocurrency innovation.