James Seyffart’s 2027 Warning: Many Crypto ETPs Face Extinction
The crypto exchange-traded product landscape is heading for a brutal shakeout. According to Bloomberg Intelligence analyst James Seyffart, a significant number of these funds won't survive the next two years. The clock is ticking toward 2027.
The Survival of the Fittest (and Largest)
It's a classic market Darwinism play. Seyffart's analysis points to a harsh reality for smaller, niche crypto ETPs. As investor capital consolidates around a handful of established, high-liquidity products, the rest get starved out. The market isn't big enough—or patient enough—to fund every single thematic bet.
Liquidity is King, Niche is a Liability
The warning cuts to the core of the ETP model. These products live and die by their assets under management and daily trading volume. A fund tracking a single, obscure protocol might sound clever in a pitch deck, but if it can't attract real money, the economics collapse. Issuers face mounting costs, and without scale, they'll pull the plug. It's the financial equivalent of launching a rocket with just enough fuel to get halfway.
The Institutional Filter is On
This looming consolidation acts as a brutal quality filter. The survivors will likely be the broad-market vehicles—think Bitcoin and Ethereum—alongside a few mega-thematic funds with undeniable demand. The rest? They're heading for the graveyard of good ideas that nobody paid for. It's a necessary, if ruthless, step toward maturity for the asset class, separating professional-grade infrastructure from speculative window dressing.
The message for investors is clear: check under the hood. That exciting new crypto ETP might just be a liquidation waiting to happen. In finance, sometimes the most innovative product is the one that manages to keep the lights on.
Rosenbluth agrees that many ETFs are going to close
Todd Rosenbluth, the head of ETF trends research at VettaFi, is also concerned that an excessive number of ETPs are being introduced, and some of them may close. He noted that the reason why BlackRock or any other large asset manager is not closing its popular ETFs is that it has too many of them. They are pulling inventory off the shelf that is not selling to make room for products that are more likely to sell.
Greg Stumm, the CEO and president of American Beacon Advisors, also emphasized that new assets may not last, despite issuers launching funds at a rapid pace. He initially believed that half of the 11 U.S.-listed spot Bitcoin ETFs would have closed by now, but noted that even the small ones are now worth over $500 million.
Meanwhile, ETFGI reported a total of 622 closures in 2024, with the U.S. accounting for the highest number at 196. On the other hand, there were 179 closures in the first four months of 2025. In 2023, there were 244 ETF closures with an average age of 5.4 years and an average AUM (assets under management) of about $54 million.
Several popular ETPs, including ARK 21Shares’ ARKY (ARK 21Shares Active Bitcoin ethereum Strategy ETF) and ARKC (ARK 21Shares Active On-Chain Bitcoin Strategy ETF), have already been liquidated this year. These investment products ended up shutting down because they failed to attract enough inflows for sufficient AUMs.
New U.S. SEC listing guideline to speed up ETF approvals
The U.S. SEC introduced new listing guidelines that could speed up ETF approvals, providing issuers with a faster and clearer path to market and reducing the backlog of shutdowns. The generic listing standards were approved in late September, and they removed the need for individual 19(b) approvals for qualifying crypto ETPs.
The new U.S. SEC guidelines also allow issuers to choose between requested accelerated effectiveness and automatic effectiveness under Rule 461 for faster launches. The agency approved generic listing standards for commodity-based trust shares on the New York Stock Exchange, the Arca, the Nasdaq, and the Chicago Board Options Exchange, BZX Exchange.
The U.S. SEC Chair Paul Atkins believes the new listing guidelines will reduce barriers to access crypto-related products and provide investors with more choices. James Selway, Director of the Division of Trading and Markets, added that the commission’s approval of generic listing guidelines provides investors with much-needed regulatory clarity and certainty.
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