TLDR
- Bitwise CIO Matt Hougan forecasts SEC’s new listing standards will spark a surge in crypto ETPs.
- SEC’s proposed rules would make it easier to launch crypto ETPs, reducing approval time to 75 days.
- If approved, crypto ETPs for assets like Solana, XRP, and Dogecoin could soon be available.
- The new listing standards could help traditional investors access crypto markets more easily.
Matt Hougan, Chief Investment Officer at Bitwise, has predicted that the SEC’s upcoming generic listing standards for crypto exchange-traded products (ETPs) could unleash a surge of new products, potentially transforming the crypto market. Hougan likened the current crypto market environment to a pre-game show for a major event, suggesting that the end of the year could bring a “spectacular rally.”
Currently, launching new crypto ETPs, including spot ETPs for assets like Solana or XRP, requires a lengthy and unpredictable approval process. This process can take up to 240 days and still offers no guarantee of approval. However, the SEC’s push to adopt generic listing standards for crypto ETPs could significantly streamline this process.
Importance of Generic Listing Standards
Generic listing standards would allow issuers to launch crypto ETPs without waiting for individual approval each time, provided the asset meets specific criteria. According to Hougan, these criteria will likely involve the existence of regulated futures markets for the underlying assets, such as those on platforms like the CME, Cboe, or possibly Coinbase Derivatives Exchange.
If approved, the new standards could reduce the approval process to as little as 75 days. This would accelerate the pace at which crypto ETPs are introduced, allowing for a wider range of assets, including Solana, XRP, Dogecoin, Chainlink, and many others.
Such a change would likely lead to the rapid proliferation of single-asset and index-based crypto ETPs, making it easier for traditional investors to participate in the crypto market.
Impact of Faster ETP Approvals on the Market
The introduction of generic listing standards could mirror the experience of the traditional ETF market, which saw a massive increase in the number of products launched following the SEC’s adoption of similar rules for traditional ETPs in 2019. After the rule change, the number of new stock and bond ETFs listed annually tripled, from about 117 to 370.
Hougan believes that crypto will experience a similar explosion in product offerings. He predicts that traditional asset managers will quickly enter the space, creating new products that make it easier for the average investor to buy crypto assets.
As more ETPs come to market, the visibility and accessibility of crypto will improve, attracting more institutional and retail investors.
Crypto ETPs and Asset Prices
While the introduction of new ETPs could increase market access, Hougan cautioned that their existence alone does not guarantee significant inflows. For instance, when U.S. spot Ethereum ETPs launched in June 2024, they did not see substantial interest until stablecoin adoption began to rise the following year.
Hougan emphasized that, while new crypto ETPs make it easier for traditional investors to enter the market, fundamental interest in the underlying assets is crucial for attracting significant flows. For example, assets like Bitcoin Cash may struggle to gain traction unless the asset itself sees renewed interest and development.
Nevertheless, Hougan believes that once the broader market dynamics improve, crypto ETPs will be well-positioned to benefit from a wave of new investments. They will provide a simpler, more familiar entry point for traditional investors who have previously been reluctant to engage with the complex world of cryptocurrency.
A Turning Point for Crypto
According to Hougan, the SEC’s move to adopt generic listing standards represents a “coming of age” moment for the crypto industry. It signals that crypto is finally reaching mainstream acceptance and becoming an integral part of global financial markets.
However, this is only the beginning, as more developments are expected in the coming months.
The new listing standards could also help lift the crypto market’s profile among everyday investors. By making tokens like Chainlink or Avalanche as easy to invest in as traditional stocks, crypto will become more familiar and less intimidating. This could open up new opportunities for crypto to become a mainstream asset class in traditional portfolios.
