What’s next: Crypto ETF ‘floodgates’ poised to open as SEC weighs faster approval framework

The U.S. Securities and Exchange Commission appears poised to approve multiple spot cryptocurrency exchange-traded funds, as key stakeholders consider a framework that could expedite the listing process.

Over the past several months, firms have submitted proposals for ETFs tracking cryptocurrencies, including Solana ($SOL), $XRP, and Dogecoin ($DOGE). Last week, the SEC returned comments on a proposal for a $SOL ETF, raising questions about staking and other technical details, according to a source familiar with the matter. Conversations with the SEC have been constructive, the source added.

"So all of those are indications that it's a matter of when, not if, for these, but the when is to be determined," the source told The Block.

The SEC has taken a more receptive stance toward digital asset regulation in recent months, backed by support from the highest levels of government. President Donald Trump has pledged to make the U.S. the global "crypto capital,"launched a memecoin, and appointed pro-crypto regulators, including new SEC Chair Paul Atkins.

In a more favorable environment, issuers have been looking to launch a wide array of crypto funds and are looking to see what sticks.

There is definitely a change in tone at the SEC, said Gregory King, founder and CEO of Osprey Funds and Rex Shares, during an X Spaces on Tuesday hosted by WOLF Trading.

"They're [SEC] not going to be as cavalier as the man in the White House launching his own memecoin and stuff, but they are pro-business, pro-innovation and pro-crypto," King said.

King’s firms recently launched the Rex-Osprey $SOL + Staking ETF, which he described as the “first-ever staked crypto ETF.” The product differs from other proposals through a clever legal workaround, operating as a taxable C corporation, which allowsstaking distributions to be taxed at the fund level before being paid out as dividends. The management fee is 0.75%, though effective fees may be higher due to tax accruals, according to previous reporting from The Block.

Last week, the SEC also approved a mixed crypto fund from Grayscale, although that approval was later paused. In a letter to the New York Stock Exchange, SEC Deputy Secretary J. Matthew DeLesDernier noted that the agency’s Division of Trading and Markets had granted approval, but the full commission would review the decision. Grayscalesaid that it remains committed to the listing and is working closely with stakeholders.

The fund, currently available over the counter to accredited investors, is composed of nearly 80% bitcoin, 11% Ethereum, and smaller allocations to Solana, Cardano, and XRP.

According to the source familiar with the SEC’s approach, the agency is proceeding in phases: first approving spot bitcoin ETFs, then Ethereum ETFs, and now contemplating Grayscale's proposal.

"I think they're just naturally going down a path of approving a bitcoin ETP, approving an Ethereum ETP, approving an ETP that's mostly bitcoin, Ethereum and some other assets and then approving those 100% other assets," the source said.

Last week, reporting from independent journalist Eleanor Terrett revealed that the SEC was in the early phases of creating a listing standard for crypto ETFs, which would expedite the process for listing those funds. Under current rules, exchanges must file a 19b-4 form, triggering a review period of up to 240 days. The proposed framework would reduce that timeline, the source said.

The exchanges are driving that initiative, the source added, and would fall in line with how it currently works for more traditional ETFs. The New York Stock Exchange, Nasdaq, and Cboe did not respond to a request for comment.

"It's actually an initiative by the exchanges going to the SEC and saying, we want these listing standards that we've come up with for you to approve," the source said. "So that way, every time we have a new crypto ETP, so long as it falls within these standards, we don't have to go to the SEC to approve it. We can just approve it ourselves."

Standards under discussion may include metrics such as market capitalization, decentralization, and wallet distribution, the source added, with the SEC also involved in the discussions.

"They're (SEC) engaged with the exchanges on it… they just want to make sure that whatever they ultimately approve of, it's something that protects investors and leads to efficient markets," they said.

Firm 21Shares said in an email to The Block last week that it had not been in direct conversations with the SEC about a "proposed universal listing standard for token-based ETFs." 21Shares has proposed ETFs tracking $SOL and XRP.

"If such a framework were to be implemented, it could significantly reduce the current complexity and uncertainty involved in the listing process by removing much of the guesswork and ambiguity inherent in the existing 19b-4 approval procedure," they said.

During the WOLF Trading X Spaces on Tuesday, Bloomberg Intelligence ETF analyst James Seyffart said he expects a draft of the framework could emerge as soon as this month, with implementation possible by September or October.

"Then we will see the floodgates open on these other assets, but that's what I'm waiting for," he said.

Seyffart and his colleague, Bloomberg Senior ETF Analyst Eric Balchunas, recently estimated a 95% chance of SEC approval for ETFs tracking $SOL, $XRP, and Litecoin, with Dogecoin, Cardano, and Polkadot proposals also having strong odds, around 90%.