The Future of Crypto ETFs Hangs in the Balance
Recent developments from the Securities and Exchange Commission (SEC) regarding several spot crypto exchange-traded fund (ETF) applications have sparked interest in the industry. However, analysts predict that the SEC is unlikely to make any approval decisions until the agency’s leadership is firmly established.
Leadership Changes Impact ETF Approvals
James Seyffart, an ETF analyst at Bloomberg Intelligence, expressed skepticism about the prospects of any applications being approved before the confirmation of Paul Atkins as the new chair of the SEC. “I would have been very surprised if they approved any of these filings before Atkins was confirmed at their first deadlines,” Seyffart noted. He emphasized that any decisions that could be postponed will likely occur until Atkins officially assumes his role at the SEC.
A source familiar with the situation echoed Seyffart’s perspective, stating, “This administration has shown an ability to break precedent, so I guess it’s within the realm of possibility to see an early approval. I’d be surprised, but you never know.” This sentiment highlights the uncertainty surrounding the approval timeline for crypto ETFs.
Paul Atkins: The New Face of the SEC
President Donald Trump has nominated former SEC commissioner and current CEO of Patomak Global Partners, Paul Atkins, to lead the agency. Following the resignation of former SEC Chair Gary Gensler in January, the SEC has been in a state of transition. As of now, no confirmation hearing has been scheduled for Atkins, which adds to the uncertainty surrounding ETF approvals.
Spot Crypto ETFs Delayed
On Tuesday, the SEC postponed decisions on several spot crypto ETFs, including those related to XRP, Solana (SOL), Dogecoin (DOGE), and Litecoin (LTC). While this delay was not entirely unexpected, it still reflects the cautious approach the agency is taking amid leadership changes.
Historical Context of ETF Approvals
The path to approval for spot Bitcoin (BTC) and Ether (ETH) ETFs has been lengthy and complex, taking years for issuers to receive the SEC’s endorsement despite the existence of regulated futures markets for these assets. Although a regulated futures market is not a legal prerequisite for launching ETFs, it has been a significant factor for the SEC in evaluating applications.
Current Approval Odds and Expectations
As it stands, none of the pending ETF applications meet the criteria established during the previous evaluations of Bitcoin and Ether ETFs. Nevertheless, Seyffart and his colleagues believe there is a 65% or higher chance that several altcoin ETFs could receive approval by the end of the year. The timing of these approvals is contingent on the confirmation of the new SEC chair.
The SEC’s Historical Review Process
In previous reviews of Bitcoin and Ether ETF applications, the SEC has often utilized procedural delays to extend decision deadlines, sometimes stretching them to nearly 240 days—the maximum duration allowed for approval or rejection. Seyffart noted, “Theoretically we should have a chair by then, but I wouldn’t necessarily say it’s guaranteed that these things will be approved immediately.” He added that the chances of approval are certainly better than for the earlier March and April deadlines for various spot crypto assets.
In conclusion, the approval landscape for crypto ETFs remains uncertain as the SEC navigates leadership changes and ongoing evaluations of pending applications. Investors and industry participants will be watching closely as these developments unfold.
