Crypto ETF Approval: What it Means for Altcoin Prices
Crypto ETF Floodgates Open After SEC Rule Change
The U.S. Securities and Exchange Commission (SEC) has streamlined the process for listing crypto exchange-traded products (ETPs), a move expected to significantly alter investment flows into digital assets. New rules will affect the crypto market, and analysts are now closely observing the market's movement.
On Wednesday, the SEC approved generic listing standards for “commodity-based trust shares” across major exchanges like Nasdaq, Cboe BZX, and NYSE Arca. This regulatory update simplifies the listing process for new crypto investment vehicles.
Simplified Listing Process
Previously, each crypto ETP required an individual rule filing under Section 19(b) of the Exchange Act. Now, ETPs whose assets meet specific criteria—such as trading on a market within the Intermarket Surveillance Group (ISG) or having a futures contract listed on a CFTC-regulated market for at least six months—can use these generic standards.
Expected Increase in Crypto ETF Offerings
Experts predict a surge in new crypto ETF filings and launches due to the reduced regulatory hurdles.
“[The] crypto ETF floodgates are about to open,” said Nate Geraci, ETF analyst and president of NovaDius Wealth Management. “Expect an absolute deluge of new filings and launches... crypto is going mainstream via the ETF wrapper.”
Matt Hougan, CIO of Bitwise, considers the SEC's action a “coming of age” moment for crypto, signaling entry into the “big leagues.”
Historical data supports this outlook. Following the SEC's approval of generic listing standards for bond and stock-based products in 2019, ETF launches more than tripled within a year, jumping from 117 to 370, as pointed out by Hougan. The increased ETF options made tracking market fluctuations easier, and allowed investors to see the best cryptos to buy based on fund analysis.
Impact on Crypto Prices: What to Expect
While an increase in crypto ETPs is expected, Matt Hougan cautions against assuming automatic inflows. He notes that fundamental interest in the underlying asset is crucial. For instance, spot Ether (ETH) ETFs saw slow initial inflows, only picking up nearly a year post-launch, coinciding with increased stablecoin activity and a stronger Ethereum investment narrative.
Assets with less clear use cases may face challenges in attracting capital without renewed fundamental support.
ETPs lower entry barriers for traditional investors, facilitating easier allocation to crypto once market sentiment improves. Exposure to cryptocurrencies like Avalanche, Chainlink, Dogecoin, XRP, Solana, Sui and Aptos become far easier.
Paul Howard, Senior Director at Wincent, notes that the tokens benefitting from this move are likely to be large-cap altcoins. “For institutions that cannot own spot [crypto] directly, these vehicles provide a wrapper and move liquidity into the ecosystem.” These investment options provide a way to invest in cryptocurrency without owning it directly.