Questions remain amid crypto ETF frenzy
One ex-SEC senior counsel doesn’t “expect an overnight response to this, [but] rather a slow rollout of approvals”
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I know it’s a Fed rate decision day, but let’s also take a moment to go over the latest crypto ETF filings.
Solana and XRP ETF proposals appeared not long after the milestone US spot bitcoin and ether ETF launches of 2024.
Movement on a litecoin fund plan preceded REX Shares and Osprey last week proposing ETFs that would hold assets including DOGE, BONK and Trump’s memecoin. Tuttle Capital Management — further testing the limits — more recently floated leveraged ETFs linked to 10 different crypto assets.
And just yesterday, Bitwise filed its S-1 for a dogecoin ETF. Cboe also re-filed its 19b-4s for solana ETFs from Bitwise, 21Shares, VanEck and Canary Capital. The Gensler-led agency was reportedly not interested in considering those.
Some have theorized that Elon Musk’s backing of DOGE could help fast-track approval of Bitwise’s latest proposal, for example.
A person close to the filings told me it remains to be seen how the SEC will approach the so-called “Winklevoss standard.” The name reflects the agency’s interpretation of the Exchange Act when it rejected the Winklevoss twins’ bitcoin ETF proposal in 2018 — requiring the existence of “a regulated market of significant size.”
The SEC has historically wanted to see such a regulated futures market in particular, for which only BTC and ETH currently exist. Whether CME Group will soon launch SOL and XRP futures contracts is up in the air.
“How the SEC changes, or doesn’t change, its view on this specific interpretation is the key for these new filings,” the person said, speaking on the condition of anonymity amid issuer conversations with regulators.
The SEC has not yet publicly signaled whether or not it’s open to changing its stance on this matter. But the person pointed out that SEC Commissioner Hester Peirce — now leading a crypto task force — “notably” dissented to the SEC’s interpretation in the first order that established this requirement.
Mark Uyeda is serving as acting SEC chair after Gary Gensler’s departure. The senate must still confirm Trump’s nominee to lead the agency: Paul Atkins.
Adrienne Gurley, an ex-SEC senior counsel and partner at Venable LLP, labeled Atkins as “pro-innovation” and “not in favor of onerous requirements that are cost-prohibitive for companies.”
Ultimately, she expects there will be “a case by case evaluation” of the proposed crypto products.
“Further, the SEC will have to coordinate with the CFTC on certain guidelines,” Gurley told me. “So I don’t expect an overnight response to this, [but] rather a slow rollout of approvals.”
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