The Cboe BZX Exchange is advocating for a transformative change in the process for approving cryptocurrency exchange-traded funds (ETFs) in the United States. The exchange has approached the Securities and Exchange Commission (SEC) with a proposal to replace the existing individual approval system with a streamlined, uniform set of listing rules.
The proposed framework aims to simplify the process significantly, allowing cryptocurrency funds that meet predetermined criteria to launch without necessitating separate applications for each product. This shift would notably cut down on paperwork and eliminate delays that have bogged down the rollout of new Bitcoin, Ethereum, and other cryptocurrency-based ETFs.
ETF expert Nate Geraci commented on the filing, highlighting the advantages of a standardised approach. According to Geraci, under the new system, issuers would no longer need to request individual approvals for each crypto ETF, provided they comply with certain established criteria.
Currently, the approval process for a new crypto ETF can extend for as long as 240 days, incurring separate reviews for each new fund. The Cboe’s initiative comes in light of the SEC’s recent approval of in-kind creation and redemption mechanisms for crypto ETFs. This change represents a significant alignment with the operational structures of traditional equity and commodity funds.
Despite not targeting specific products, the Cboe’s proposal could feasibly apply to future ETFs that include Bitcoin, Ethereum, or other cryptocurrencies. The streamlined process would incorporate essential requirements, such as surveillance practices, trading suspension regulations, and minimum specifications for share count, market value, and public disclosure.
This movement for a more efficient approval process is partly in response to the SEC’s inconsistent approach towards cryptocurrency investment vehicles. For instance, the SEC had recently paused Bitwise’s ETF conversion request after a brief approval, echoing similar decisions concerning Grayscale.
The Cboe’s push underscores a growing need for regulatory clarity and efficiency in the rapidly evolving landscape of cryptocurrency investment products, paving the way for potential growth and innovation in the sector.
