SEC’s New Rules Could Accelerate Crypto ETF Approvals
In a significant shift for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has prompted issuers of crypto exchange-traded funds (ETFs) to retract their 19b-4 filings. This move could pave the way for a swifter approval process, thanks to recent regulatory changes that have eliminated a major bureaucratic hurdle.
A New Era of Generic Listing Standards
Earlier this month, the SEC endorsed new generic listing standards, which allow exchanges to list commodity-based exchange-traded products (ETPs) tied to cryptocurrencies without individual reviews. These changes are set to streamline the pathway to launching spot crypto ETFs, a development eagerly anticipated by many in the financial world.
Traditionally, the process of launching an ETF involved a two-step process: issuers had to collaborate with exchanges to submit 19b-4 filings, which are formal requests to amend exchange rules. This was a necessary precursor before an ETF could be listed. However, under the newly updated framework, this step is no longer necessary for certain products. Now, issuers merely need to file an S-1 document, which details an ETF’s structure and strategy, to gain approval from the SEC.
Potential for Rapid Approvals
James Seyffart, an ETF analyst at Bloomberg Intelligence, noted that the SEC has the capability to move “absurdly fast” if it desires. “We could see approvals in a matter of days,” Seyffart mentioned, although he cautioned that there’s no guarantee of such rapid action. He pointed out that the SEC still hasn’t approved Bitwise’s BITW to transition into an ETF, attributing this to the agency’s typical first-to-file approach for the ETF industry. This might mean that the SEC will roll out approvals in waves or opt for a simultaneous launch of various products.
A Growing List of Proposals
Over recent months, asset managers have been busy filing a growing list of spot crypto ETF proposals, covering a variety of coins like Solana (SOL), Litecoin (LTC), and Dogecoin (DOGE). These proposals previously required both 19b-4 and S-1 filings, reflecting the dual-stage process mandated under the old regulations. With the removal of the 19b-4 requirement, the SEC’s updated stance means that exchanges can now list crypto-based ETFs falling within the generic commodity ETP category without having to seek a rule change every time a new product is introduced.
The Road Ahead: Opportunities and Uncertainties
While the exact timeline for the SEC to act on the outstanding S-1 filings is still uncertain, the recent changes signify a notable shift in the agency’s approach to the crypto markets. This could potentially open the door for a broader range of digital asset funds to enter the market with fewer regulatory delays, a development that many stakeholders view with optimism.
However, it’s not all smooth sailing. Seyffart also pointed out the uncertainty surrounding the situation, especially considering the looming threat of a government shutdown. “Everything is uncertain. Add in the prospect of a government shutdown, and things can get really wonky,” he remarked.
Balancing Optimism with Realism
For the cryptocurrency sector, these regulatory changes are a double-edged sword. On one hand, they represent a long-awaited opportunity for faster, more efficient ETF approvals, which could enhance market accessibility and attract a broader base of investors. On the other hand, the unpredictability of SEC’s actions — compounded by potential political and economic factors — means that stakeholders should remain cautiously optimistic.
As the situation unfolds, asset managers, investors, and exchanges alike are keeping a close watch on the SEC’s next moves. The hope is that the new rules will indeed lead to a more streamlined process, but as always in the regulatory landscape, the only certainty is change itself. In the meantime, the crypto world waits with bated breath, ready to adapt to whatever comes next.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
