The SEC opened the ‘floodgates’ for crypto ETFs, experts say, marking a new era for the industry

The new Trump-appointed SEC chairman Paul Atkins is one step closer to his vision of a decentralized finance movement after the SEC released new guidance this month giving asset managers more details on getting exchange-traded products tied to cryptocurrencies approved by the commission. The move invites an anticipated gush of funds exposed to cryptocurrencies like Solana, Ripple’s XRP, and potentially even Trump’s memecoin, experts told Fortune.

“The floodgates are basically completely open right now as to what can be introduced,” Crypto Insights Group CEO Andy Martinez told Fortune. The digital asset data provider connects institutions to fund managers. “We anticipate seeing much more capital coming into the crypto investment products,” he said.

The guidance, released July 1, is a tacit “nod of approval” to crypto ETF applications by a more crypto-friendly Republican-led SEC, experts told Fortune. It’s also a marked departure from Atkins’ predecessor, former SEC chair Gary Gensler, who faced a barrage of criticism over his handling of the crypto industry.

In January, the SEC announced a new crypto task force aimed at developing a regulatory framework for crypto assets, just days after Trump introduced his memecoin, $TRUMP, a type of cryptocurrency typically tied to an online joke or trend. Now, with the latest guidance, asset management firms have a clearer picture of how to tailor their crypto ETF applications for approval, inviting a new stream of applications.

In 2024, the SEC approved the first crypto ETF, allowing 11 firms to launch Bitcoin ETFs that track the current market price, or spot price, of the popular cryptocurrency. The greenlight made it possible for investors to gain exposure to Bitcoin through exchange-traded vehicles without having to purchase it directly. The SEC approved ETFs for the second-most popular cryptocurrency, Ethereum, later that year. 

Now, Martinez says the SEC has a “very large backlog” of ETFs built around different crypto assets waiting to be approved and expects the list only to lengthen after the new guidance, though it is expected to expedite the approval process.

“It’s quite a long process, and with guidance like this, part of the initiative is to reduce that time to launch significantly,” Martinez said.

Though the guidance is not a formal set of rules, Aniket Ullal, head of ETF Research & Analytics at CFRA Research, said it reflects the current SEC administration’s goal to be more proactive when it comes to crypto regulation. Gensler sought to block the approval of Bitcoin ETFs, before a court decision paved the way for their launch.  

“Under the previous Gensler-led SEC, there was a view that the SEC was being more reactive to crypto,” Ullal told Fortune. “There’s a lot of applications. I think there’ll be a lot more launches and the launches will be more frequent and more varied in terms of the kind of coin.”

Ullal said as of July 7, there are 76 ETFs listed in the U.S. that track crypto spot and future prices. Bitcoin and Ether products make up the overwhelming majority of crypto ETFs. Ullal expects to see more spot products from Solana and Ripple as well as other coins being introduced to ETFs.

“Right now we only have four coins, which is Bitcoin, Ether, Ripple, Solana, so we may see other types of coins, including potentially a Trump coin.”

New guidance calls for greater transparency 

The SEC guidance tells asset managers to write in “plain English” a description of the crypto asset and its trading platform, giving asset managers the responsibility to disclose potential conflicts of interests.

The disclosure requirements are similar to any asset registered under the SEC, Ullal said, but with extra “crypto-specific” detail needed due to the many nuances that come from the non-traditional asset.

“Conceptually, the idea of having disclosure and transparency also exists in the equity and bond space,” Ullal said. “Here, things aren’t as standardized.”

Still, Crypto Insights Group chief operating officer Vin Molino told Fortune greater disclosure requirements may advantage bigger, traditional asset managers wanting to get into the crypto space, while relatively smaller asset managers that deal with crypto exclusively may have more trouble adjusting to the new compliance regime as rapidly.

“So what that means is that these firms probably very quickly are going to have to be able to provide higher industry standard levels of transparency and disclosure that they might not otherwise be used to,” Molino.