tl;dr
Cboe BZX and NYSE Arca have proposed to the SEC to speed up approval for certain crypto ETFs by allowing automatic listing without individual SEC review under Rule 19b-4. The proposal seeks to align crypto ETF rules with those for traditional ETFs, enabling commodity-based trusts linked to cryptocur...
Two major U.S. exchanges, Cboe BZX and NYSE Arca, have submitted separate proposals to the Securities and Exchange Commission (SEC) seeking to expedite the approval process for certain crypto exchange-traded funds (ETFs). The proposed rule change would allow specific crypto ETFs to be listed automatically without the current case-by-case SEC review under Rule 19b-4, which requires exchanges to submit individual filings for approval.
The exchanges aim to align crypto ETF regulations more closely with those governing traditional asset classes. Under the proposal, commodity-based trust shares tied to major cryptocurrencies like Bitcoin and Ethereum could be listed if they meet predefined criteria, shortening timeframes for market entry. This approach may also expand faster access to products tracking other digital assets such as Solana, XRP, or baskets of tokens.
Currently, equity and bond ETFs satisfying certain conditions can list without new rule filings. Extending this framework to digital asset trusts would reduce regulatory barriers and accelerate product availability. Andrew Rossow, CEO of AR Media Consulting, emphasized that while listing speed is a key factor, the implications extend to stronger operating procedures and investor protections as ETF issuers engage more with regulated broker-dealers in handling crypto assets.
The proposal does not broaden the range of eligible products but only modifies the approval process for those already permissible. However, concerns arise about potential regulatory favoritism favoring Bitcoin and Ethereum, potentially disadvantaging other crypto projects. Rossow warns this selective process could hinder the development and impact of emerging digital assets.
The SEC may take up to 240 days to review the proposal, and historically, the agency has used the full allowance period for comparable rule changes. Neither the exchanges nor the SEC has provided immediate commentary on the filings.