As 2024 came to a close, speculative indicators pointed towards a significant turning point for the global cryptocurrency industry. Encouraged by the forthcoming arrival of a more crypto-accommodative United States administration under Donald Trump, the industry braced for a favourable regulatory climate. Added to this, asset management firms seized the moment to prepare for this anticipated shift, evidenced by a surge in applications for cryptocurrency-related exchange-traded funds (ETFs) in the same week. This piece dives into the emerging landscape of crypto ETFs and how it signals the shape of things to come.
The Emergence of Crypto ETFs
On January 17, notably, several asset management entities filed applications for no less than six crypto ETFs with the United States Securities and Exchange Commission (SEC). ProShares, a prominent name in the asset management space, lodged requests for leveraged & inverse XRP and Solana ETFs.
To provide a clearer understanding, leveraged exchange-traded funds are designed to boost the performance of its associated asset (XRP in this context). Conversely, an inverse ETF provides stakeholders the chance to benefit from the opposite performance trajectory of an asset. In addition to these, ProShares made moves for XRP and Solana futures ETFs. These fresh investment offerings provide potential investors exposure to future XRP and Solana price movements, subject to predetermined futures contracts.
Valkyrie initiated an application for CoinShares Digital Asset ETF, aiming to spotlight the ten largest digital assets based on market capitalization. Investment entity Tidal submitted a proposal for Oasis Capital Digital Asset Debt Strategy ETF, anticipated to invest in the debt of companies within the digital asset sphere.
This recent wave follows on the heels of filings from Canary Capital and VanEck. Prior to this, on January 16, Canary revamped their S-1 form for the Litecoin ETF. In similar moves, Van Eck registered for an “Onchain Economy” ETF. According to their filing, this new ETF will place stakes in a variety of companies within the crypto industry.
Projecting 2025: The Crypto Landscape
The year 2025 has always been earmarked as a pivotal year for the introduction of a host of crypto ETFs and the year has begun as predicted. As SEC chairman Gary Gensler is due to depart his role on January 20, his successor, the more crypto-friendly Paul Atkins, is set to ascend to the position.
Atkins, an ex-SEC Commissioner who served during President George W. Bush’s tenure, is renowned for advocating for relaxed regulations on financial markets. These imminent modifications to the regulatory climate are expected to establish a backdrop conducive to increased institutional adoption in 2025.
FAQs
What are the implications of the new leadership at the SEC for the Crypto industry?
The projected leadership of Paul Atkins at the SEC is expected to initiate a more crypto-friendly regulatory environment, which could result in increased institutional adoption and the approval of several cryptocurrency-related ETFs.
How do Crypto ETFs function?
Crypto ETFs track the performance of a specific cryptocurrency or a basket of digital assets. They provide investors with exposure to the crypto market without the need to directly own the assets. The performance of these ETFs is linked to the fluctuations of their underlying assets.
Which organizations have recently applied for Crypto ETFs?
Several leading asset management firms including ProShares, VanEck, Tidal, Valkyrie, and Canary Capital have recently filed applications for new crypto ETFs with the SEC.
What is expected for the Crypto market in 2025?
2025 is anticipated to be a pivotal year for the crypto market, with new crypto ETFs, increased institutional adoption, and a favorable regulatory environment under new SEC leadership.
