SEC could blow crypto ETP market "wide open" through generic listing framework: Bitwise

Bitwise Chief Investment Officer (CIO) Matt Hougan stated in a note to investors on Tuesday that the Securities & Exchange Commission's (SEC) plan to develop generic listing standards for crypto exchange-traded products (ETPs) could trigger an end-of-year rally for the crypto market.

Hougan teases end-of-year crypto rally following potential SEC adoption of generic ETP listing standard

Bitwise CIO Matt Hougan said in a Tuesday note that the SEC's proposed generic listing standard for crypto ETPs could "blow the market wide open."

He stated that the current review process for crypto ETPs can take up to 240 days, with no guarantee of approval. Hougan highlighted that the first spot Bitcoin application was filed in 2013, yet the SEC did not grant approval until 2024, underscoring the uncertainty issuers face when applying for such products.

However, the agency's new approach to potentially adopt a generic listing standard — which is expected to occur in October — could pave the way for a wave of new crypto ETPs. Applications meeting clear requirements could be approved in as little as 75 days, Hougan said.

This would mirror the rapid growth of ETFs after the SEC adopted the "ETF Rule" in 2019, creating generic listing standards for stock and bond products.

"I would expect the same thing here. We should see dozens of single-asset crypto ETPs and the rise of index-based crypto ETPs," he wrote.

He also argued that products tied to Solana, XRP, Avalanche, Litecoin, Dogecoin and other tokens could soon hit the market. This stems from proposals to the SEC suggesting that spot crypto ETPs should be permitted whenever a futures contract for the underlying asset is listed on a regulated US exchange.

Examples of such exchanges include major platforms like CME and Cboe, with room for smaller exchanges such as Coinbase Derivatives Exchange and Bitnomial.

However, Hougan added that the launch of a crypto ETP does not ensure demand, citing Ethereum funds, which saw little inflows following their debut in June 2024. The products only picked up pace after stablecoin demand and corporate treasury accumulation lifted investor interest in its ecosystem over the past few months. 

He pointed out that products tied to crypto assets like Bitcoin Cash may face the same challenge unless the tokens themselves revive.