The U.S. Securities and Exchange Commission (SEC) is working on new rules that could streamline the approval process for crypto exchange-traded products (ETPs). According to Bitwise’s Chief Investment Officer Matt Hougan, this change could bring a surge of new crypto ETFs to the market. However, experts warn that approval alone does not guarantee investor inflows.
Faster ETF Approvals on the Horizon
Currently, every crypto ETF application undergoes a lengthy review process of up to 240 days, where issuers must prove that the underlying market is liquid, transparent, and resistant to manipulation.
Under the new SEC framework, compliant applications could be approved in 75 days or less, and listings would be virtually guaranteed if they meet predefined standards. Hougan noted that this mirrors traditional ETF history, where simplified listing rules led to an explosion of new products.
Despite the optimism, Hougan warned that the mere existence of a crypto ETF does not ensure investor demand. For example, ETFs based on less popular assets like Bitcoin Cash may struggle to attract meaningful inflows unless the underlying cryptocurrency gains momentum.
“You need fundamental interest in the asset itself. ETFs simply make access easier once the fundamentals turn,” Hougan emphasized.
This highlights a critical reality: ETFs succeed only if investors see long-term value in the underlying coins.
Investor Demand Still Uncertain
Other market experts share similar caution. Earlier this year, Sygnum Bank’s research head Katalin Tischhauser noted that while enthusiasm around ETF launches is high, substantial demand sources remain unclear.
At the same time, recent launches show mixed signals. The first Solana staking ETF debuted on July 3 with $12 million in inflows—a “healthy start,” according to Bloomberg analyst James Seyffart. Meanwhile, two new ETFs tracking XRP and Dogecoin are set to launch this week, testing investor appetite beyond Bitcoin and Ethereum.
Analysts at Bitfinex argue that altcoins may not see major rallies until ETFs that track higher-risk digital assets gain approval. The Altcoin Season Index recently hit its highest level in 90 days, reflecting increased speculative interest.
Still, the long-term success of ETFs will depend on:
- Market fundamentals of the underlying crypto
- Institutional adoption trends
- Liquidity and regulatory clarity
The SEC’s streamlined ETF rules could transform the crypto investment landscape by making new products easier to launch. But experts agree that approval alone isn’t enough—ETFs will only thrive if investor confidence in the underlying assets grows.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.