New Spot Crypto Products? Regulators Say Bring It On

Two top Wall Street regulators are telling issuers not to be shy when it comes to filing for new spot crypto products.

The SEC and CFTC issued a rare joint statement last week informing asset managers that there is nothing prohibiting the trading of spot crypto products on registered exchanges, like the NYSE or NASDAQ. The agencies also said they are ready to support the consideration of new fillings for “certain spot crypto asset products,” although there were no further details on what those funds may actually entail. The guidance, however, will likely continue crypto’s push toward mainstream acceptance in the world of traditional finance.

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File First, Details Later

Current SEC Commissioner Paul Atkins, a Trump appointee, has made it clear that crypto is on the docket for 2025 and beyond. The agency under his leadership already approved in-kind redemptions for spot Bitcoin and Ethereum ETFs earlier this month. The latest guidance, despite not substantively changing any laws or regulations, signals the agency’s openness to reviewing new crypto filings.

The language is likely intentionally vague so that the agencies can let issuers file and see what comes in, said VettaFi Head of Sector and Industry Research Roxanna Islam. “I doubt they’re going to say something like, ‘Now we can trade all crypto products,’” she said. “They’re opening it up to see what will be filed first.”

Other items in the statement include:

• CFTC-registered designated contract markets and foreign boards of trade, as well as SEC-registered national securities exchanges, “aren’t prohibited” from trading spot crypto products.
• The Divisions will “promptly review filings and requests” by these exchanges and “stand[s] ready to engage regarding any questions.”

“One of the advantages of investing in [crypto] through a [spot product] is that you don’t have to go through an exchange like Kraken,” said Islam. “This gives a little bit more comfort to investors that now they’re trading on mainstream exchanges. So it could take away some [spot crypto ETF] share.”

Around to Crypto in 80 Days. The guidance echoes earlier commitments from Atkins and his CFTC counterpart, acting chair Caroline Pham, to move quickly when it comes to regulating crypto. The overall message for the market is that they want spot crypto products to be regulated, and fast. Still, much about how this will work in practice remains undefined. “We don’t really know what sort of trading restrictions these will have,” Islam said. “There’s still a lot of things up in the air.”

This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter.

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