State of Crypto: ETF Listings Became Easier

What to know:

• The U.S. derivatives watchdog and likely future leading crypto regulator, the Commodity Futures Trading Commission, is pushing an initiative on tokenized-asset collateral involving stablecoins.
• The agency's acting head, Caroline Pham, has long advocated digging into this potential use for stablecoins.

A majority of commissioners at the U.S. Securities and Exchange Commission voted to streamline the process by which companies could list and trade shares of spot crypto exchange-traded funds (ETFs), as well as other types of ETFs, through the approval of a generic listing standard.

For over a decade, the process to (try and) list a spot crypto exchange-traded fund was a 270-day process which usually ended in the ETF application being rejected. Last year, under former SEC Chair Gary Gensler, the regulator approved the first spot crypto ETFs, for Bitcoin and Ether. Over the past year, we've seen applications for a number of other assets.

The idea that the SEC would create generic listing standards has been discussed for a few months, at least since the regulator paused the launch of Grayscale's Digital Large Cap Fund earlier this year.

In July, the SEC approved GDLC to uplist as an ETF, but almost immediately paused the process. At the time, an individual familiar said the pause was likely intended to give the SEC enough time to develop those generic listing standards.

This past Wednesday, the SEC approved those standards, letting companies bypass the Exchange Act process if their proposed products meet the standards.

In a statement, SEC Chairman Paul Atkins said, "By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets. This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets."

A number of spot crypto ETF applications have been waiting for a final decision from the regulator, and it seems likely that a number of new products will come to market in the coming months.