The US Securities and Exchange Commission streamlining the approval process for crypto exchange-traded products (ETPs) may trigger a surge of new offerings, but that doesn’t guarantee their success, a crypto executive warns.
“The adoption of generic listing standards — which could come as early as October — will likely usher in a ton of new crypto ETPs. This is intuitive, but it’s also backed up by ETF history,” Bitwise chief investment officer Matt Hougan said in a report on Monday.
However, Hougan warned that the launch of a crypto ETF should not be confused with renewed hype for cryptocurrency.
Crypto ETFs’ “mere existence” no guarantee of success
“The mere existence of a crypto ETP does not guarantee significant inflows. You need fundamental interest in the underlying asset,” Hougan said.
“I suspect ETPs built on assets like Bitcoin Cash will have a hard time attracting flows unless the asset itself finds new life,” he added.
However, Hougan emphasized that launching ETFs positions the products to rally when “fundamentals start to turn,” as ETFs make it easier for traditional investors to allocate capital to crypto.
Sygnum’s research head, Katalin Tischhauser, told Cointelegraph in February that there “is all this frothy excitement in the market about these ETFs coming, and no one can point to where substantial demand is going to come from.”
Two new altcoin exchange-traded funds are expected to launch in the US this week, tracking XRP (XRP) and Dogecoin (DOGE).
The Altcoin Season Index reached its highest score in 90 days on Sunday. Source: CoinMarketCap
On July 3, the US’ first Solana (SOL) staking ETF ended its debut trading day with $12 million in inflows, which Bloomberg ETF analyst James Seyffart said was a “healthy start to trading.”
Currently, the SEC reviews spot crypto ETFs on a case-by-case basis. Issuers must file detailed proposals showing that the underlying market is sufficiently liquid and resistant to manipulation, among other requirements.
New process would see compliant crypto ETFs “virtually guaranteed”
The review can take up to 240 days, with no guarantee of approval.
Under the new process that the SEC is working on, applications would be “virtually guaranteed” if they meet precise requirements, Hougan said. “It’s also fast: Applications would be approved in 75 days or less.”
Bitfinex analysts said on Aug. 26 that altcoins may not see a broad, outsized rally until the approval of crypto ETFs that give investors exposure further down the risk curve.
