SEC Working on New Listing Standards for Token-Based ETFs with Exchanges

Key Insights:

• SEC reviews plan to streamline crypto ETF approval process.
• Grayscale’s Digital Large Cap Fund gains SEC approval for listing.
• Analysts predict 95% chance of crypto ETF approvals in 2025.

The SEC is reviewing a new protocol aimed at simplifying the approval process for cryptocurrency exchange-traded funds.

This change could potentially remove the current 19b-4 rule-change filing requirement, replacing it with a single-step S-1 registration process. The goal is to shorten approval timelines, making it easier for asset managers to launch crypto ETFs and improve access to the growing market.

New Process to Streamline Crypto ETF Approvals

At the moment, crypto ETFs will support a two-step system of approval, which needs S-I registration and 19b-4 filing. By getting rid of the 19b-4 requirement, the potential plan conducted by the SEC would simplify such. With the new setup, the possible crypto ETFs would only be required to file the S-1 registration form.

SEC would then go on to review the application during a 75 day period. In a case where the ETF satisfies all the relevant requirements, the exchange would have the privilege of listing it directly without the need of undergoing further approval procedures. The purpose of this move lies in minimizing the delays in back-and-forth negotiations so that the approval may occur faster.

The offered modification would become applicable to only crypto ETFs, meeting particular listing criteria, established by exchanges. Though the SEC would be free of the 19b-4 filing, exchanges would still liaise with the institution to enhance transparency and regulation as per the guidelines.

Market Shifts and Approval Odds for Crypto ETFs

As the SEC moves closer to revising its rules, analysts are increasing their forecasts for the approval of crypto ETFs. According to ETF specialists at Bloomberg, the chances of Solana, Litecoin, and XRP spot ETFs receiving SEC approval this year are now at 95%.

Previously, analysts had estimated the approval odds for these altcoin ETFs at 90%. The analysts, Eric Balchunas and James Seyffart, expect a surge in new crypto ETFs in the second half of 2025, signaling heightened optimism within the market.

In addition, they have also given the same 95% approval probability to a potential ETF based on a basket or index of crypto assets. The SEC is expected to decide on Solana, Litecoin, and XRP ETFs by October, while the basket ETF could see approval as early as this week.

The analysts’ updated forecast highlights growing confidence in the SEC’s willingness to approve a wider variety of crypto-related ETFs.

Rising Demand for Crypto ETFs

The possible amendment of the rule by the SEC is a reaction to rising market demand of crypto ETFs. Retail and institutional investors are more directed towards utilizing ETFs as a regulated and safer way to place exposure on the uncertain market of cryptocurrency. A streamlined process of approvals would assist in achieving this increased demand in the most effective way in a very minimal time on the side of issuers.

The U.S. Securities and Exchange Commission has also made a major decision approving a first-time index ETF that will enable an index ETF that invests in crypto assets beyond Bitcoin and Ether, to be listed on the U.S. market.

This decision marks another regulatory victory for issuers within the crypto space. NYSE Arca had filed last year to list shares of Grayscale Investments’ Digital Large Cap Fund (GDLC) as an exchange-traded product, and the SEC gave its green light on the proposal earlier this week.

Launched privately in 2018, GDLC transitioned to public trading on OTC Markets the following year. The fund currently manages around $775 million in assets. While Bitcoin and Ether dominate the fund’s holdings, making up 91% of its portfolio, it also includes other digital assets such as XRP, Solana (SOL), and Cardano (ADA). This approval opens the door for broader exposure to a more diverse array of cryptocurrencies within a regulated, exchange-traded format.

Ultimately, in a case where the SEC follows through with the proposed changes, asset managers will no longer have to deal with obstacles when introducing new crypto ETFs. This would invite more entrants into the market resulting in a wider variety of product and more competition. The new SEC is adapting to the nature of the crypto market and its increasing popularity among institutional and retail investors, which means that the agency is transforming its priorities to better suit the changing environment.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.