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The US Securities and Exchange Commission simplifying the approval process for crypto exchange-traded products (ETPs) may result in a wave of new offerings, yet that doesn’t ensure their triumph, a cryptocurrency executive cautions.
“The implementation of standardized listing criteria — which may occur as soon as October — is likely to lead to an influx of new crypto ETPs. This is logical, but it’s also supported by ETF history,” Bitwise chief investment officer Matt Hougan stated in a report released on Monday.
Nonetheless, Hougan warned that the introduction of a crypto ETF should not be misconstrued as a revival of excitement for cryptocurrency.
Crypto ETFs’ “simple existence” not a guarantee of success
“The simple existence of a crypto ETP does not ensure considerable inflows. There must be inherent interest in the underlying asset,” Hougan remarked.
“I suspect ETPs based on assets like Bitcoin Cash will struggle to draw flows unless the asset itself rejuvenates,” he added.
However, Hougan stressed that launching ETFs positions these products to surge when “fundamentals begin to shift,” as ETFs facilitate traditional investors’ ability to allocate funds to crypto.
Sygnum’s research head, Katalin Tischhauser, informed Cointelegraph in February that there “is all this frothy excitement in the marketplace regarding these ETFs, yet no one can identify where significant demand will originate.”
Two new altcoin exchange-traded funds are anticipated to debut in the US this week, tracking XRP (XRP) and Dogecoin (DOGE).
On July 3, the US’ inaugural Solana (SOL) staking ETF concluded its first trading day with $12 million in inflows, which Bloomberg ETF analyst James Seyffart described as a “promising start to trading.”
At present, the SEC evaluates spot crypto ETFs on a case-by-case basis. Issuers must submit comprehensive proposals demonstrating that the underlying market is sufficiently liquid and resistant to manipulation, among other prerequisites.
New process would render compliant crypto ETFs “virtually assured”
The review may last up to 240 days, with no assurance of approval.
Related: Spot BTC ETFs attract $642M, ETH adds $406M amid ‘increasing confidence’
Under the revised process that the SEC is developing, applications would be “virtually assured” if they meet specific criteria, Hougan indicated. “It’s also expedient: Applications would be sanctioned in 75 days or fewer.”
Bitfinex analysts noted on Aug. 26 that altcoins might not experience a widespread, significant rally until the approval of crypto ETFs that provide investors exposure further down the risk spectrum.
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