Let’s take a moment to delve into the recent updates regarding cryptocurrency exchange-traded funds (ETFs). Yesterday, the U.S. Securities and Exchange Commission (SEC) postponed its decision on Fidelity’s proposed spot Solana ETF. While this delay is not unexpected, it serves as a reminder that the agency has additional matters to address before granting approvals. Last month, the SEC’s interactions with issuers generated optimism for potential early rulings, ahead of the upcoming October deadlines. According to a source familiar with the filings, the SEC has reached out to asset managers regarding their recent amendments and has given them until July 31 to respond to new inquiries about the product’s structure. However, this source also indicated that the SEC may be waiting to finalize the anticipated “generic listing standards” before approving Solana funds. Although SEC staff has solicited feedback from exchanges on these drafts, the expectation is that they will not be finalized until closer to—or possibly in—October.
Conversations with various stakeholders suggest that there is a general uncertainty about timelines, as this territory is largely unexplored. It’s essential to highlight that SEC Commissioner Hester Peirce has consistently advocated for patience, implying that a hasty decision from the SEC is unlikely.
### SEC’s Actions on Other Crypto ETFs
In a previous update, I mentioned the SEC’s approval of NYSE Arca’s 19b-4 application to list the Grayscale Digital Large Cap Fund (GDLC) as an ETF. However, a letter dated July 1 from the SEC’s deputy secretary to NYSE Group’s senior counsel indicated that this order is currently “stayed” until further notice from the regulator. A spokesperson from Grayscale commented on this unexpected development, emphasizing the constantly changing nature of regulations affecting innovative digital asset products like the GDLC. The firm remains committed to pursuing the GDLC listing. Similarly, Bitwise is still striving to convert its Bitwise 10 Crypto Index Fund (BITW) into an ETF, while Hashdex aims to expand its Nasdaq Crypto Index US ETF (NCIQ) with additional assets. There haven’t been any updates on the Bitwise and Hashdex proposals, leaving us in a state of anticipation.
In a notable move, Yorkville America Digital, in collaboration with Trump Media and Technology Group, filed for a Truth Social Crypto Blue Chip ETF on Tuesday. This fund is projected to include allocations of 70% in Bitcoin, 15% in Ether, 8% in Solana, 5% in Cronos, and 2% in XRP. A spokesperson has yet to provide insights into the reasoning behind these specific allocations or the inclusion of Cronos, although it is known that Crypto.com, which partners with Trump Media, developed the Cronos blockchain. Notably, the market cap of Cronos ranked 44th among all cryptocurrencies according to CoinGecko this morning.
### Current Trends in Crypto ETF Launches
To summarize, while there has been progress in the paperwork phase, we have yet to witness substantial launches—except for the REX-Osprey SOL Staking ETF, which operates under a different structure than typical crypto trusts. Regarding the trading of spot crypto ETFs, U.S. Bitcoin products have experienced significant inflows, with these funds enjoying net inflows on 18 out of the last 19 trading days, amounting to a total of $5.6 billion during that period. The sector is nearing the $50 billion mark for net inflows, as reported by Farside Investors. As for U.S. ETH ETF inflows from June 9 to July 7, they reached a commendable $1.1 billion.
Overall, crypto investment products have seen 12 consecutive weeks of inflows, according to data from CoinShares, pushing assets under management (AUM) to an all-time high of $188 billion. I am intrigued to see the level of demand for other single-asset crypto ETFs once they become available in the U.S. Some market analysts believe that the greater potential lies in crypto index funds, which cater to investors seeking to avoid the complexities of selecting individual cryptocurrencies. This perspective appears reasonable, but we will soon find out how the market responds.
