SEC Greenlights More Crypto ETFs—Here’s the Fine Print You Can’t Ignore

The SEC just cracked the door wider for crypto ETFs—but don’t pop the champagne yet. Wall Street’s favorite regulatory gatekeeper tossed a curveball, and the 'catch' could leave investors grinding their teeth.

Here’s what you need to know.

The Approval Illusion

More ETFs? Sure. But the SEC’s blessing comes with strings tighter than a Bitcoin maximalist’s grip on their cold wallet. Expect stricter custody rules, heavier disclosures, and enough red tape to wallpaper Satoshi’s anonymous lair.

Why This Matters

Institutional money’s been lurking on the sidelines, waiting for this moment. Now? They’ll dive in—just as regulators make sure the water’s full of sharks (and paperwork).

Funny how the 'financial innovation' always arrives with a side of compliance headaches—almost like the system’s designed to keep the little guy out. But hey, that’s finance for you.

Crypto ETFs Get Derivatives-Driven Framework Under New SEC Standards

According to a fresh exchange filing, the SEC now allows exchange-traded funds (ETFs) for cryptocurrencies with futures contracts listed for at least six months on either Coinbase Derivatives or the Chicago Mercantile Exchange (CME).

The new rule allows an issuer's shares to be listed on an exchange if the underlying commodity to which exposure is given has a contract on a Designated Contract Market for at least 6 months. pic.twitter.com/zd5rDdCxPg

Bloomberg ETF analyst Eric Balchunas called the new rule a “pretty big deal,” explaining that it essentially opens the door to ETFs on roughly a dozen altcoins, many of which already had high approval odds.

“Any coin that has futures tracking it for over six months on Coinbase’s derivatives exchange WOULD be approved,” Balchunas wrote on X (Twitter).

According to the ETF analyst, while CME futures are valid, Coinbase Exchange’s derivatives marketplace has more coins than the CME (Chicago Mercantile Exchange), an American derivatives marketplace.

Based on this, Balchunas says it is easier to use Coinbase since it includes the CME ones too. This development follows the SEC’s recent approval of in-kind redemptions for Bitcoin and ethereum ETFs.

Futures Markets Take Center Stage in ETF Eligibility

The decision aligned further with traditional financial infrastructure, setting the stage for more complex crypto products.

However, the path is not as straightforward for meme coins and less-established digital assets.

Balchunas emphasized that assets like Solana-based Bonk or TRUMP coin, which lack active futures markets, would require a more complex route through the Investment Company Act 1940 (40 Act), dubbed the “$SSK Maneuver.”

“So, we could see that too but in a different structure. History shows, 33 Act is preferred because it is pure spot,” Balchunas quipped.

This structure is more restrictive and contrasts with the 1933 Securities Act (33 Act), which governs most spot crypto ETFs. Reportedly, issuers prefer this structure for its simplicity.

James Seyffart, an ETF analyst, argued that the SEC is outsourcing its decision-making.

He indicates that proposed listing standards do not mention market capitalization, liquidity thresholds, or token float requirements. This means it is all about futures markets for now.

“The SEC pseudo outsourced the decision making for which digital assets will be allowed in an ETF wrapper. The CFTC is the primary decider of what asset can have futures contracts, and having futures is the primary requirement of this rule proposal,” he wrote.

Until a spot crypto exchange becomes a member of the Intermarket Surveillance Group (ISG), Coinbase Derivatives remains the only “pure crypto” member, highlighting its critical role.

While the filing sets the framework, questions remain about timing. Balchunas estimates approvals could arrive as soon as September or October, depending on regulatory feedback and final rule implementation.

The rule change is now seen as a major milestone in crypto’s integration with mainstream financial markets.

It may not open the floodgates yet, but it offers a clearer roadmap for how more crypto assets beyond Bitcoin and Ethereum could gain ETF exposure in the coming months.