As the cryptocurrency market continues to grow and mature, a new wave of exchange-traded funds (ETFs) is expected to emerge in the United States. According to senior Bloomberg ETF analyst Eric Balchunas, a combination fund tracking both Bitcoin and Ether is anticipated to be the first in this new wave.
A Wave of Cryptocurrency ETFs on the Horizon
Balchunas posted an analysis on X on December 17, highlighting that regulators view certain cryptocurrencies more favorably than others. He noted that the Securities and Exchange Commission (SEC) has already rejected multiple Solana ETFs, but expects new funds to be approved in the coming year.
The First New Fund: Bitcoin and Ether Combo
According to Balchunas, the first new fund is expected to track both Bitcoin (BTC) and Ether (ETH). This fund will be followed by others tracking Litecoin (LTC) or Hedera (HBAR).
Regulatory Favoritism: Why Litecoin and Hedera Stand Out
The analysts believe that regulators view Litecoin more favorably because it is a fork of Bitcoin, which may be seen as a commodity. Additionally, Hedera has not been labeled as a security by the SEC, making it easier for an exchange-traded product to receive approval.
SEC’s Labeled Cryptocurrencies: XRP and Solana
XRP and SOL have been labeled as securities by the SEC, with Ripple having engaged in a years-long legal battle with the agency over the legal status of XRP. The analysts expect HABR and LTC to have higher odds of approval due to their regulatory favoritism.
Investor Demand: A Question Mark
While the analysts see HABR and LTC as having higher odds of approval, they said it’s still unclear whether the funds will see much investor demand.
A More Receptive SEC? Trump’s Nomination May Bring Change
Many crypto pundits expect the SEC under Trump’s administration to be more receptive to crypto assets. Trump recently said he intended to nominate pro-crypto businessman and former SEC commissioner Paul Atkins as the next SEC chair, which may bring de-regulation amid a more pro-crypto policy.
The Departure of Gary Gensler: A New Era for the SEC
Current SEC Chair Gary Gensler announced that he would resign from the agency on the day of Trump’s inauguration on January 20. Fellow Democratic commissioner Jamie Lizarrage said he would step down days before that on January 17.
The Possibility of Four Crypto-Friendly Commissioners
On December 17, SEC Commissioner Caroline Crenshaw had her re-nomination vote canceled, opening up the possibility of four Trump-aligned and crypto-friendly commissioners.
What This Means for the Future of Cryptocurrencies
This development may signal a new era of regulatory favoritism towards cryptocurrencies. With a more receptive SEC, it’s possible that we’ll see a surge in approved ETFs and other investment vehicles.
The Market’s Response: A Growing Appetite for Crypto Investments
As the market continues to grow and mature, we’re seeing an increasing appetite for crypto investments. With new funds on the horizon, investors may have more opportunities to participate in the growth of this exciting space.
Investing in Cryptocurrencies: What You Need to Know
Before investing in cryptocurrencies, it’s essential to understand the regulatory landscape and the potential risks involved. As the market continues to evolve, we’ll be keeping a close eye on developments that may impact investor demand and market trends.
Expert Insights: What They’re Saying About the Future of Cryptocurrencies
- "Crypto has 4 years to grow so big ‘no one can shut it down’ — Kain Warwick, Infinex"
- "We expect a wave of cryptocurrency ETFs next year, albeit not all at once." – Eric Balchunas
- "The SEC under Trump’s administration will be more receptive to crypto assets." – Paul Atkins
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