Bitwise CIO sees SEC advancing listing standards to unleash ‘ETPalooza’ for crypto

Matt Hougan, Chief Investment Officer at crypto asset manager Bitwise, said that despite September's seasonality, the Securities and Exchange Commission's proposed generic listing standards could "blow the market wide open," setting the stage for crypto's "ETPalooza."

"Watching the crypto market right now is like watching the Super Bowl pre-game show," Hougan said in a note to clients on Tuesday. "Things are set up for a spectacular end-of-year rally, with rate cuts, surging exchange-traded product inflows, rising concerns about the dollar, and incredible momentum in tokenization and stablecoins. Yet as investors, we've largely been stuck waiting."

Hougan pointed to September's seasonality as one of the reasons — historically the worst month for crypto returns. However, he also pointed out that recent developments, such as Bitcoin ETP approvals at major wirehouses or progress on new legislation in Congress, take time to bear fruit.

Why are generic listing standards so important?

Right now, every new spot crypto ETP in the U.S. — whether it's Solana, XRP, Litecoin, Dogecoin, Chainlink, or anything else — requires a one-off SEC filing that can drag on for up to 240 days with no guarantee of approval, Hougan said. The first spot Bitcoin ETP filing occurred in 2013, but the SEC didn't approve any until 2024, he noted.

Generic listing standards, currently being worked on by the agency, would change that. Instead of requesting approval from the SEC each time, issuers could launch any crypto ETP that meets predefined criteria — most likely tied to whether the asset already has a regulated futures market in the U.S. at exchanges like the CME or Cboe, but potentially also lesser-known platforms like Coinbase Derivatives Exchange, Hougan added.

The result would mean predictable approvals in as little as 75 days, unlocking a wide range of crypto ETPs as more futures markets come online. "Assuming the more expansive list makes the grade, the list of crypto assets that could soon gain ETPs includes Solana, XRP, Chainlink, Cardano, Avalanche, Polkadot, Hedera, Dogecoin, Shiba Inu, Litecoin, and Bitcoin Cash, among others," he said.

Increasing the pace of ETF issuance

The adoption of generic listing standards would therefore likely expand the number of crypto ETPs significantly, in Hougan's view, reflecting what occurred in other ETF markets after similar rules were introduced.

When the SEC adopted the "ETF Rule" for more traditional products in 2019, replacing similar case-by-case approvals with generic listing standards, new stock and bond ETF launches in the U.S. tripled from about 117 a year to 370. Issuers surged too, since launching became almost "push-button easy," Hougan said.

Crypto could see the same playbook, according to the Bitwise CIO. Once generic listing standards arrive — potentially as soon as October — we're likely to get dozens of single-asset and index-based crypto ETPs, with traditional asset managers also piling in, he said.

Generic listing standards dramatically increased the pace of ETF issuance. Image: Bitwise.

The impact on crypto asset prices

The simple existence of more crypto ETPs does not guarantee significant flows, Hougan acknowledged, with fundamental interest in the underlying assets also required.

For example, the U.S. spot Ethereum ETPs were launched in June 2024, but they only drew significant assets after stablecoin interest picked up nearly a year later. Likewise, ETPs for assets like Bitcoin Cash will have a hard time attracting flows unless the asset itself finds new life, he said.

However, ETPs make it easier for traditional investors to allocate to crypto, so assets are better positioned to "rip" when fundamentals improve, he continued. They reduce the barrier to entry by turning tokens like Chainlink or Avalanche into simple tickers in brokerage accounts, making crypto more visible and accessible to the average investor and a broader audience.

"The SEC adopting generic listing standards is a 'coming of age' moment for crypto, a signal that we've reached the big leagues," Hougan concluded. "But it’s also just the beginning."