Future Of Crypto ETFs: SEC Proposes Generic Standards For Token Listings— Details

The US Securities and Exchange Commission (SEC) is taking steps to establish comprehensive listing standards for crypto (ETFs, a development that could significantly impact the broader digital asset market. 

According to a social media post on X (formerly Twitter) by Eleanor Terrett, host of Crypto in America, these efforts are aimed at simplifying the ETF approval process for crypto assets.

New Criteria For Crypto ETFs Could Fast-Track Listings

Terrett reported on her social media platform that if a token meets the forthcoming criteria, issuers may be able to bypass the lengthy 19b-4 process. Instead, they crypto ETFs issuers could file an S-1 registration form, wait for 75 days, and subsequently list the token on an exchange. 

This change could alleviate the burden of paperwork and reduce the back-and-forth communication typically required between issuers and the SEC, therefore accelerating the approval of long-awaited exchange-traded funds in altcoins already filled by asset managers in the country.

While the specific criteria for these crypto ETFs listing standards remain uncertain, there is speculation that factors such as market capitalization, trading volume, and liquidity are being considered. 

Bloomberg ETF expert Eric Balchunas responded to Terrett’s insights, expressing optimism about the impending changes. He noted that the industry is bullish on the potential approval of a wide range of cryptocurrencies, with expectations that the standards will be flexible enough to accommodate most of the top 50 coins.

SEC’s Latest Guidance

In addition to developing listing standards for crypto ETFs, the SEC’s Division of Corporation Finance has issued new guidance regarding disclosure expectations for crypto exchange-traded products (ETPs). 

This guidance outlines essential information that issuers must include in their filings, covering aspects such as how to calculate net asset value (NAV), select benchmarks, and implement custody practices. 

The move indicates a commitment to establishing a more structured oversight framework for digital asset products, such as crypto ETFs, especially as interest in these investment vehicles, like those based on Solana (SOL), continues to grow.

The SEC’s objective is to provide clearer application of federal securities laws to crypto assets, facilitating capital formation while ensuring investor protections. 

Crypto asset ETPs, which are investment products listed on national securities exchanges, typically function as trusts holding either spot crypto assets or derivative instruments referencing these assets. 

As issuers of these investment vehicles, they are required to register their offerings under the Securities Act of 1933 and the Securities Exchange Act of 1934, and they must adhere to the anti-fraud provisions of federal securities laws.

The SEC’s latest statement reflects ongoing observations regarding disclosure practices in the crypto ETs space, addressing common issues encountered during reviews of digital asset filings. 

While the guidance is not exhaustive and may not apply to every issuer, it serves as a valuable resource for companies navigating the progressive landscape of crypto ETFs regulation in the US under Trump’s new administration.

Featured image from DALL-E, chart from TradingView.com