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In yesterday’s edition of the Forward Guidance newsletter, Felix Jauvin broke down Wednesday’s Fed rate cut. But it’s also important that we shed some light on the other big thing that went down on Sept. 17.
That would be the SEC approving general listing standards for commodity-based trust shares (a.k.a. crypto ETPs). This was not an unexpected approval by any means, as we knew the SEC was working through this. But the timing seemed to surprise some people, coming a bit earlier than expected.
The US securities regulator shortly after lifted its “stay order” related to Grayscale’s Digital Large Cap Fund (GDLC) — a multi-asset ETP offering exposure to 90% of the crypto market.
Changing its name, the Grayscale CoinDesk Crypto 5 ETF hit the NYSE Arca this morning. Its current holdings are:
Each of the tokens GDLC hotels are deemed acceptable (or soon will be) under the new generic listing standards, noted Krista Lynch, Grayscale’s senior VP of ETF capital markets.
“To me, it really illustrates the convergence of traditional finance and digital assets and the evolving toolkit we now have to deliver diversified, rules-based crypto products to investors,” she told me.
It takes a lot of time and money to try to launch ETFs, which is all well and good if you know there’s an approval at the finish line. That hasn’t been the case for crypto ETFs historically, with issuers failing for a decade or so to launch US spot bitcoin ETFs, for example. They finally got the green light in January 2024.
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But generic listing standards would streamline approvals as long as an ETP proposal meets the set-out requirements:
First things first: ISG = intermarket surveillance group. DCM = designated contract market. CSSA = comprehensive surveillance sharing agreement.
Galaxy Research associate Lucas Tcheyan noted in an August report that 10 tokens (beyond BTC and ETH) met the then-proposed generic listing standards: DOGE, BCH, LTC, LINK, XLM, AVAX, SHIB, DOT, SOL, and HBAR. He added that ADA and XRP would soon qualify — after their listing on Coinbase Derivatives (qualifying as a DCM) hits six months.
What does this all mean at a higher level? More products, Bitwise’s CIO expects.
Hougan told me in an email that the new standards are “a huge milestone that helps clear the path for BITW” — Bitwise’s own crypto index fund. The firm declined to comment on a specific launch timeline.
Hashdex declined to comment too. But a person familiar with the matter said the firm is working on getting additional tokens added to its Hashdex Nasdaq Crypto Index US ETF (NCIQ) “under the conditions of the general listing rule.”
As for the many single-asset crypto ETP proposals in front of the SEC, it would seem a portion of those products won’t be far behind.
A person familiar with the crypto ETF filings told me the SEC has given issuers a Sept. 26 deadline to make the next round of amendments to their solana ETF S-1s. An SEC decision on those proposals is expected by Oct. 10.
“They will also begin to incorporate features like staking, which the framework explicitly permits,” Lynch said of new crypto ETPs. “That creates the potential to unlock meaningful new sources of value for shareholders.”
Quick note on the above: Like with the US ether ETFs, staking might not be enabled in some of these products on Day 1, executives told me this week. I’ll leave Blockworks’ latest Roundtable on staking ETFs here.
Bitcoin and ether ETFs, which launched in January 2024 and July 2024, respectively, gave us a glimpse of what pent-up demand can look like. Weekly crypto ETF flows peaked at ~$4.6 billion in mid-July as interest in ETH ramped up, Blockworks Research data shows:
Just as the BTC and ETH products broke down investor barriers to entry (i.e. complex custody, a lack of regulated vehicles), so too will the coming wave of crypto ETPs for other digital assets.
We know not every altcoin product will attract the same level of demand as the bitcoin or ether products — and maybe not even close.
“But broadening the menu of investable products is critical,” Lynch said. “It expands investor choice, drives demand for education, and pushes the conversation beyond bitcoin and ethereum toward thinking about digital assets as an integrated, diversified asset class.”
When it comes to investing, diversification tends to win out.
