The U.S. Securities and Exchange Commission issued its first comprehensive guidance on disclosure requirements for cryptocurrency exchange-traded products last Tuesday, marking a pivotal shift in regulatory approach that could accelerate approval of dozens of pending ETF applications. The 12-page document signals the Republican leadership's dramatic departure from previous enforcement-heavy tactics, establishing a framework for products tied to everything from Solana and XRP to President Donald Trump's meme coin.
What to Know:
- SEC guidance represents first step toward streamlined approval process for crypto ETFs, potentially reducing approval time from 240 days to 75 days
- New framework addresses "explosion" in pending applications while SEC task force drafts comprehensive regulations for crypto investment products
- REX Financial bypassed traditional approval process, launching first U.S. Solana ETF that collected $12 million on opening day
Regulatory Framework Emerges After Years of Enforcement
The guidance represents the first component of a broader regulatory landscape the SEC is constructing for cryptocurrency investment products. Asset managers expect additional guidance from the SEC's division of trading and markets focused on streamlining application processes, according to people familiar with ongoing discussions.
"The SEC is moving forward on creating a framework for how they'd like to see all these crypto assets included in investment funds" to address the "explosion" in pending ETF applications, said Sui Chung, CEO of crypto index provider CF Benchmarks. The Republican leadership has refocused the agency's crypto enforcement team and paused high-profile cases that many observers believed the SEC was winning.
Industry participants found few surprises in the initial guidance. "The most interesting and important thing about this guidance is that it exists," said Matt Hougan, chief investment officer of Bitwise Asset Management, which has more than half a dozen crypto ETFs awaiting SEC approval.
The guidance requires issuers to clearly address distinctive factors of crypto-based ETFs in "plain English," including custody arrangements and risks within the hyper-competitive landscape. Hougan noted the guidance suggests the SEC acknowledges crypto ETPs are becoming mainstream and seeks to establish clear operational rules.
Template System Could Slash Approval Timeline
The SEC staff is developing a new listing template to replace the current requirement for exchanges to submit special forms for each crypto product listing, according to several people familiar with confidential proceedings. The current form, known as a 19(b)4, requests exemptions from existing listing rules for specific ETFs.
Eliminating this requirement could reduce the timeline between filing and launch from 240 days to just 75 days.
"The SEC is looking for a general rule it can apply to all listings, and currently is going back and forth on precise wording with the exchanges," said a senior executive at one issuer.
The executive expects exchanges will submit general filings "within days or weeks." Officials at Nasdaq Stock Market and Cboe declined comment on the discussions, while the New York Stock Exchange did not respond to requests. An SEC spokesperson also declined comment on the ongoing talks.
ETFs tied to spot prices of coins including XRP, Polkadot, Dogecoin and the Trump meme coin await SEC verdicts. Issuers expect the next batch of crypto products will focus on Solana, the world's sixth-largest cryptocurrency, though launches likely won't occur until after the SEC releases the second part of its guidance, pushing debut dates into early autumn.
First Solana ETF Launches Through Alternative Structure
Some asset managers aren't waiting for traditional approval processes. REX Financial and Osprey Funds launched the first U.S. ETF providing Solana exposure last week using a more complex approach that bypasses standard commodity fund rules.
The REX-Osprey Sol + Staking ETF invests in a separate entity that owns both Solana and a non-U.S. Solana fund, allowing REX to leapfrog other issuers while offering investors yield through cryptocurrency "staking." In staking, cryptocurrency holders validate blockchain transactions and receive transaction fees or newly created cryptocurrencies in return.
"We do think the SEC is taking big steps forward in dealing with cryptocurrency, but it's still the SEC, and not everything has been codified yet," Greg King, CEO of REX Financial, told Reuters. King acknowledged attempting to gain advantage in what promises to be fierce competition for market share on new Solana products.
The new ETF attracted $12 million in assets on its first trading day, July 1. "We'll probably do a spot Solana ETP too, once those rules are in place," King added. "There's no either/or in this situation."
Closing Thoughts
The SEC's new guidance framework represents a fundamental shift toward regulatory clarity in the cryptocurrency ETF space, potentially opening the door for rapid approval of dozens of pending applications. While the agency continues developing comprehensive rules, innovative fund managers are already finding alternative pathways to market, setting the stage for intensified competition in the emerging crypto investment product sector.