- Altcoin ETFs face delays due to the lack of regulated futures markets.
- Recent filings like WisdomTree’s XRP Fund show growing interest in altcoin ETFs.
The approval of altcoin exchange-traded funds (ETFs) like Solana (SOL), XRP, Litecoin (LTC), and Hedera (HBAR) remains uncertain. Bloomberg analyst James Seyffart suggests decisions could extend into late 2025. Regulatory challenges and market constraints are the primary reasons for the delay.
The U.S. Securities and Exchange Commission (SEC) has denied altcoin ETF applications due to the absence of regulated futures markets. Seyffart explained that Bitcoin and Ethereum ETFs gained approval because of their connection to CME-regulated futures. However, most altcoins lack this structure, hindering their ETF progress.
Growing Interest in Altcoin ETFs
Recent applications, such as WisdomTree’s “XRP Fund,” highlight the growing interest in altcoin ETFs. Yet, these efforts face challenges, including concerns over custody, compliance, and market manipulation. Seyffart believes new SEC leadership in 2025 could adopt a more crypto-friendly stance, potentially accelerating approvals.
Seyffart also pointed out that staking could become an integral feature of future ETFs. Currently, regulatory frameworks do not allow staking in ETFs. He noted that a pro-crypto administration at the SEC might permit staking by 2025, boosting demand for ETFs.
Approval timelines hinge on filing processes. ETFs must navigate either the 19b-4 rule filings, which include fixed deadlines, or S-1 filings, which lack defined timelines. While Bitcoin and Ethereum ETFs followed the 19b-4 process, most altcoin ETFs have not yet done so. Even if initiated now, decisions could take until late 2025.
Multi-asset ETFs could offer a partial solution. Products like Grayscale’s GDLC and Bitwise’s Crypto 10 Index are heavily weighted toward Bitcoin and Ethereum. Seyffart explained that smaller altcoin allocations in such ETFs might face fewer regulatory hurdles. However, SEC approval still depends on whether altcoin holdings align with current guidelines.
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