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PRESS RELEASE | The U.S SEC has formally approved a number of modifications to its guidelines for the approval of exchange-traded funds (ETFs), a development that will potentially pave the way for hundreds of new crypto ETFs. The proposals have come from large exchanges such as Nasdaq, Cboe BZX, and NYSE Arca.
The main highlight is the introduction of common quotation standards for commodity-based funds. Simply put, this makes it easier for certain ETFs (including crypto ETFs) to list and trade, giving investors a smoother process to buy and sell these products.
This is a press release submitted to BitPinas
The Current Situation
Prior to this shift, the process of opening a new crypto ETF in the United States was cumbersome. Every application had to undergo its own approval process at the SEC. This made every ETF require the SEC to thoroughly review the application and approve or deny it on an individual basis.
This process created a few problems. First, it puts a heavy workload on the SEC. Reviewing each application individually was slow and complicated. Second, it created inconsistency in the treatment of ETFs. For example, the SEC had approved Bitcoin futures ETFs but rejected spot Bitcoin ETFs for years.
This difference in treatment was challenged in court. The court held that the SEC’s method was discriminatory and basically compelled the agency to sanction a spot Bitcoin ETF, as it had already sanctioned Bitcoin futures ETFs.
After this court ruling, spot crypto ETFs started surfacing on U.S. exchanges: Bitcoin ETFs came onto the market in January 2024, and Ethereum ETFs were launched in July 2024.
How the SEC’s Policy Has Changed
In light of the recently approved change, the SEC will implement a standard procedure for certain ETFs.
This way, the agency will only need to review and analyze the requests to determine whether they meet the standards, and if so, approval will be automatic. Products suitable for following this new process are those that are commodity-based, i.e., not, for example, those that are security-based (like stocks), or basket-based, or actively managed.
In other words, requests for the issuance of ETFs that passively track the price of a particular commodity will be able to follow a simplified procedure, provided that they are based on a commodity.
Crypto ETFs on the Market
Until 2023, the SEC considered only Bitcoin a commodity among cryptocurrencies. All others were considered either securities or of dubious nature.
And in this case, a court ruling issued precisely in 2023 overturned this SEC approach. This is a decision in which a judge ruled that XRP on secondary markets (i.e., on exchanges) cannot be considered a security under the law.
Since then, the agency has been forced to treat most cryptocurrencies as commodities, most notably Ethereum. In fact, in May 2024, it approved applications to issue ETH spot ETFs on US exchanges.
The upshot of all this, according to Bloomberg ETF expert Eric Balchunas, is that there is now a good chance that more than 100 new crypto ETFs will launch on US exchanges over the next 12 months.
It’s a bit as if the dam that has been holding back this inevitable evolution for years has collapsed. Balchunas also notes that the last time the SEC implemented general listing standards for ETFs, the number of launches tripled.
What It Means for Cryptocurrency Prices
This news had a positive impact on cryptocurrency prices. But now the effect does not seem to be too strong. The CMC Altcoin Season Index, for example, rose from 70 to 72 points, remaining below the 75 points that define the start of the altcoin season.
In addition, it already increased to 70 in the last few days, so today’s rise is not dramatic. In terms of prices of the major cryptocurrencies, none of the top 10 are posting a daily gain of more than 5% today.
The point is that, as with the ETH ETF spot in July 2024, the mere appearance of an altcoin ETF on an exchange may not have a significant impact on their price. This only happened with Bitcoin, which, however, is a different matter and certainly isn’t an altcoin.
Therefore, it is more likely that the real reason for today’s price increase is the rising trend of the altcoin season index that began about ten days ago, and the news mentioned in this article only served as a catalyst for further growth.
How U.S. Crypto ETF Rules Might Impact the Philippine Crypto Market
The U.S. SEC’s move to simplify the approval of crypto ETFs could open the door to hundreds of new investment options. While this change is happening in the U.S., it could have ripple effects on markets worldwide, including the Philippines.
For Filipino traders and investors, easier approvals show that crypto is becoming more accepted. This could make people more confident in using crypto in the Philippines, since the local market often follows global trends. Prices haven’t reacted much yet, but easier access to ETFs tracking Bitcoin or Ethereum could help improve market stability and liquidity over time.
Projects like Bitcoin Hyper may benefit indirectly, as more retail traders look for ways to trade digital assets outside traditional ETFs. Even though local investors can’t directly access U.S. ETFs, increasing acceptance of the product can tempt more Filipinos to trade, and volumes on platforms that have direct market access will pick up.
Prices might not spike right away, but more global demand could be the result of the U.S. adjustments, and the Philippine crypto market will be the beneficiary.
This article is published on BitPinas: SEC Gives Green Light to Hundreds of Crypto ETFs
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