SEC Fast-Tracks Spot Crypto ETFs with New Rules, But Inflows Remain Uncertain

On Wednesday, the Securities and Exchange Commission (SEC) approved the proposed rule changes by 3 national securities exchanges, which enable them to obtain generic listing standards for spot commodity Exchange-Traded-Products (ETPs)  and also for new cryptocurrencies.

The US  SEC streamlining the approval process for crypto ETPs may impact a rise in new offerings, but it does not certify its progress, according to a crypto executive.

Paul Atkins, the chairperson of the SEC, described that the new rules help ensure capital markets sustain a suitable place for digital asset innovation, enhance investor selection, and decrease distractions to access for cryptocurrencies. 

SEC’s New Rules: no guarantee of progress

Matt Hougan, the chief investment officer of Bitwise, said the establishment of a crypto exchange-traded fund should not be confused with the strength of cryptocurrency.

Hougan added,  Crypto ETP ‘s mere existence does not provide the surety of relevant inflows and requires a basic interest in the underlying digital asset.

To ensure listing eligibility, a Crypto spot exchange-traded fund must sustain a commodity that trades on a market that is a part of the Intermarket Surveillance Group, or else it needs to underlie a forthcoming contract recorded on a designated contract market for a minimum of 6 months, having a surveillance-sharing agreement in place. 

Additionally, it can also be eligible when it is already monitored by an Exchange-Traded-Fund with forty percent exposure recorded on a national securities exchange, according to the securities regulator.

To trade and record crypto ETPs that do not meet the proven generic listing standards, a crypto exchange will be required to submit a rule filing with the SEC. 

Launching an Exchange Trade Fund places the products to rally when the “basis begins to turn “ as Exchange Trade Funds make it simpler for traditional investors to assign capital to cryptocurrency, according to chief investment office Matt Hougan.

As of now, the Securities and Exchange Commission has managed the entire spot crypto ETF filing on a case-by-case basis and needs 2 separate filings: one from the asset manager for obtaining approval from distinct divisions and another from the exchange that is scheduled to list the product.

Further, the new process will reduce the maximum time period from filing to start to seventy-five days from two hundred forty days.

Due to these new rule changes, recently, the exchange has been able to list the Exchange Traded products as long as they accomplish the new generic criteria instead of the Securities and Exchange Commission having to approve each Exchange Traded Product application individually via a significantly lengthy 19(b) filing process.

According to the president of Bitwise Asset Management, Teddy Fusaro, this SEC’s new rule became a significant moment in the regulatory approach of America to cryptocurrencies, overturning many years since the initial Bitcoin Filing in 2013.

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