Crypto Currents: SEC fast-tracks crypto ETFs with new rules

In a landmark week for digital assets, the U.S. Securities and Exchange Commission has fundamentally reshaped the investment landscape by creating a fast-track approval process for crypto exchange-traded funds and simultaneously approving the nation’s first multi-asset crypto fund from Grayscale. Meanwhile, traditional finance giants DBS, Franklin Templeton, and Ripple have forged a major alliance to build on-chain trading and lending solutions in Asia. Join us at 2 PM daily on FlyCast radio for the full story, and subscribe to our YouTube channel for the Crypto Fly By.

SEC ESTABLISHES FAST-TRACK FOR CRYPTO ETFS: In a pivotal move for the digital asset industry, the U.S. Securities and Exchange Commission has approved rule changes that create a streamlined path for new cryptocurrency exchange-traded products to come to market. The regulator approved proposals from the New York Stock Exchange, Nasdaq, and Cboe BZX Exchange to adopt “generic listing standards” for crypto ETPs, a change that could slash the approval timeline from as long as 240 days to as little as 75.

Under the new framework, ETPs holding digital assets that meet certain criteria can be listed without a lengthy, bespoke review process. To qualify for the expedited pathway, a digital asset must either underlie a futures contract that has traded for at least six months on a CFTC-regulated market or already be a major component of an existing, listed fund. This decision immediately opens the door for potential ETFs based on assets like XRP (XRP-USD), solana (SOL-USD), cardano (ADA-USD), dogecoin (DOGE-USD), avalanche (AVAX-USD), and chainlink (LINK-USD).

The decision was not unanimous. SEC Commissioner Caroline Crenshaw issued a sharp dissent, arguing the move was “unsound and ahistorical” because the underlying spot crypto markets remain susceptible to fraud and manipulation and lack a primary regulator. She also noted that these products lack the investor protections found in traditional ETFs regulated under the Investment Company Act of 1940.

GRAYSCALE GAINS FIRST MULTI-ASSET FUND APPROVAL: Underscoring the impact of its new policy, the SEC also announced its approval of the Grayscale Digital Large Cap Fund, making it the first multi-asset cryptocurrency ETP in the United States. The fund is designed to provide diversified exposure to the largest digital assets by tracking the market-cap-weighted CoinDesk 5 Index.

The fund’s current components are bitcoin (BTC-USD), ether (ETH-USD), XRP, solana, and cardano. The approval is seen as a significant milestone, as it implicitly extends a degree of regulatory acceptance to a broader set of digital assets beyond bitcoin and ether. In a statement on X, Grayscale CEO Peter Mintzberg said his team was “working expeditiously to bring the FIRST multi #crypto asset ETP to market.”

DBS, FRANKLIN TEMPLETON, AND RIPPLE FORGE TOKENIZATION ALLIANCE: In Asia, some of traditional finance’s biggest names are collaborating to build institutional-grade, on-chain financial infrastructure. According to a join announcement, Singapore’s DBS Group Holdings (DBSDY) and global asset manager Franklin Templeton (BEN) have signed a memorandum of understanding with enterprise blockchain firm Ripple. The partnership aims to create new trading and lending solutions for institutional investors using tokenized assets.

The collaboration will center on listing two new assets on the DBS Digital Exchange::sgBENJI, a token representing a share in a Franklin Templeton money market fund, and Ripple USD (RLUSD-USD), Ripple’s U.S. dollar stablecoin. This will allow institutional clients to seamlessly trade between a yield-bearing security and a cash equivalent 24/7. The firms stated that the next phase will focus on allowing the sgBENJI tokens to be used as collateral for credit and repurchase agreements.

PUBLIC MARKET DIVERGENCE: The public markets are delivering mixed verdicts on crypto-linked assets. Shares of the newly public crypto exchange Gemini Space Station (GEMI) have struggled since its much-hyped IPO last week. The stock closed down nearly 13% on Wednesday, falling below its $28 IPO price as investors scrutinize the company’s financial reports, which showed a net loss of nearly $400M for the 12 months ending in June.

PRICE ACTION: As of the time of writing, bitcoin was trading at approximately $117,510.15, while ether was trading near $4,604.44, according to price data provided by CoinDesk.