This is just as good time as talking crypto ETFs as more US launches are imminent (even with the latest government shutdown).
The expected boom for both single asset and index products is set to expand the investor base that will enter the crypto asset class, industry watchers say.
How do you know that you are trying to see more crypto ETFs flood the US market? For one thing, the SEC has finalized a general list standard. As you may remember, they are set up to streamline approvals as long as the ETF proposal meets various spelled requirements.
Following the guidelines, ETF wrappers have around 12 crypto assets between Litecoin and Solana that appear to be ready for the agency to allow.
Those familiar with the application said earlier this month that the revision of the Solana ETF had a deadline of September 26th. They were no joke.
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It’s fair to say that the SEC is currently focusing most on the Solana ETF proposal, another person close to filing told me on Tuesday.
The S-1 looks ready, but you’ll probably see some fixes. Also, reports that various 19B-4s will be withdrawn quickly make sense given that the exchange does not require rule changes to list ETFs that hold assets that meet the new criteria.
It is worth noting that 19B-4 can be submitted for the proposed ETPS to hold assets outside the general list criteria.
It is also possible that standards will evolve over time. Perhaps some believe that they don’t necessarily demand assets to have a regulated futures market.
It remains to be seen whether it is a few weeks away from the release of Solana ETFS (or just a few days). Some publishers are basically ready for release, but are hesitant to guess exactly when the SEC will sign off. Bitwise Cio Matt Hougan told Blockworks’ own Katherine Ross that Halloween can see multiple new Crypto ETFs.
But beyond the timing, what should we expect from investors’ demand?
Now, the US Bitcoin ETF inflow is $57.3 billion. Ether ETF has attracted $13.7 billion so far. That inflow difference corresponds to market capitalizations of BTC (~$2.2 trillion) and ETH (~$500 billion).
As far as demand for new US crypto ETFs that have been launched is concerned, ETF.com analyst Sumit Roy assumed that assuming flows are proportional to market capitalization is a good starting point.
“But the new coins may actually perform poorly in comparison,” he added. “That’s because BTC, and not so much, ETH, benefits from the flow of asset allocation from certain investors (say).
Coins (except ETH) don’t see these flows at first, but Roy argued that if Crypto Index funds take off in a larger way, they could ultimately benefit.
“Currently, index funds are smaller than funds that hold single assets, such as BTC,” he said. “If that changes, the flow could be more widely distributed.”
New stages of crypto investment
Hashdex CIO Samir kerbage actually expects it to change. His company recently acquired regulators that add assets to the NASDAQ Crypto Index US ETF (NCIQ). NCIQ, which only owns BTC and ETH when it was launched in February, also holds XRP, Solana, Stellar and Cardano.
Index NCIQ Tracks are designed to evolve to best represent the wide range of crypto markets.
“In 5-10 years, this index could have 20, 50, 100 or 200 assets,” Kerbage told me.
The broader goal of Hashdex is to enable financial advisors to understand the Crypto ecosystem (beyond only BTC and ETH) by addressing historical issues related to allocation to space.
“We have multiple single asset ETPs, but most importantly, we’re starting to look at passive, index, benchmarks and active strategies,” explained Kerbage. “There are many variations above this asset class. This is the evolution of the asset class.”
Hashdex’s idea is that advisors and pension funds don’t want to choose individual winners.
