US Crypto ETF Approvals May Favor Only 12 Major Assets, Predicts Galaxy Digital Research

Efforts are underway to accelerate the approval process for crypto exchange-traded funds (ETFs) within the United States, but the implications may not be as promising for all tokens. According to the latest research by Galaxy Digital, most cryptos may be sidelined, with only a select number making the cut.

Future of Crypto ETFs

Recent research conducted by Lucas Tcheyan, a research associate at Galaxy Digital, indicates that out of the top 100 crypto assets by market capitalization, only 12 assets may be likely contenders in the near future, beyond Bitcoin (BTC) and Ethereum (ETH). This prediction comes following the filing of 19b-4 forms to the U.S. Securities and Exchange Commission (SEC) by three exchanges, Cboes BZX Exchange, Nasdaq, and NYSE Arca in late July. Their proposal signaled a shift from the existing case-by-case system, opting for standard listing criteria for crypto ETFs. As of now, the SEC has about 91 pending crypto ETF applications, proposing to cover 24 different tokens and several index products. Despite the backlog and a final possible deadline in 2026, accelerated approval is expected due to an increasingly crypto-friendly SEC.

Tokens Qualifying Under ‘Fast-Track’

Based on Galaxy Digital’s report, only 10 tokens currently meet the “fast-track” criteria. The eligible tokens include Dogecoin (DOGE), Bitcoin Cash (BCH), Litecoin (LTC), Chainlink (LINK), Stellar (XLM), Avalanche (AVAX), Shiba Inu (SHIB), Polkadot (DOT), Solana (SOL), and Hedera (HBAR). There are strong indications that Cardano (ADA) and XRP will join this list in September and October respectively, following their mandatory six months of regulated futures trading. “These are more likely to see ETF launches given their qualification under the proposed fast-track rule,” Tcheyan stated, also noting that nine of these tokens already have ETF applications on file.

Conditions for Fast-Track Approval

According to Tcheyan, the fast-track process has three main requirements: tokens must trade on a monitored exchange via the Intermarket Surveillance Group (ISG), have six months of regulated futures trading under their belt, or be backed by a futures ETF that holds at least 40% of the asset. As of now, only Bitcoin and Ethereum meet the first condition, due to the lack of ISG member spot crypto markets. However, this could change with new initiatives like the CFTC’s Crypto Sprint or SEC’s Project Crypto, which could create opportunities for regulated spot markets.

Impact of Lack of Regulated Crypto ETFs

Tcheyan’s report highlighted that the scarcity of regulated crypto ETFs hasn’t stifled demand. Instead, capital is being redirected to alternatives such as digital asset treasury management firms, private trusts, and structured products. In a recent analysis, Geoffrey Kendrick, the global head of digital assets research at Standard Chartered, stated that Ethereum treasury companies currently present attractive trading levels and may offer better value than U.S. spot Ethereum ETFs. While the process towards introducing regulated crypto ETFs is slow, the entire crypto landscape awaits these developments. Amid the challenges posed by regulatory oversight, the analysis by Galaxy Digital offers valuable insights into the possible future of crypto currencies in the official market.