New Crypto ETFs Await Regulatory Green Light

Investment firms are racing to secure regulatory approval for the next wave of cryptocurrency exchange-traded funds (ETFs) as the industry builds upon the remarkable success of Bitcoin ETFs that have drawn more than $65 billion in their first year, transforming how mainstream investors access digital assets and potentially setting the stage for an even more diverse crypto investment landscape in 2025, according to CNBC’s cryptocurrency market coverage.

With Bitcoin maintaining its position above $100,000 and Ethereum experiencing its strongest weekly gain since 2021, asset managers are accelerating efforts to develop products tracking additional cryptocurrencies including Solana, XRP, Litecoin, and Hedera, along with novel approaches like hybrid funds and specialized strategies catering to institutional investors seeking regulated exposure to the broader digital asset ecosystem.

Post-ETF Transformation

The introduction of spot Bitcoin ETFs in January 2024 fundamentally altered cryptocurrency investment dynamics, removing technical barriers that had previously limited mainstream participation. Unlike direct cryptocurrency purchases, which require specialized wallets and exchange accounts, ETFs allow investors to gain exposure through standard brokerage accounts and retirement vehicles.

“The ETF approval represented the bridge many traditional investors needed to cross into digital assets,” explained Matthew Sigel, head of digital assets research at VanEck, which recently filed for a Solana ETF. “Since it takes several months to get regulatory approvals and bring an ETF to market, many issuers began making a calculated bet that this year, the climate would be different, and wanted to have their products in the queue ready to go.”

Beyond Bitcoin and Ethereum

Following the successful launches of spot Bitcoin and Ethereum ETFs, multiple fund managers have filed applications for products tracking various alternative cryptocurrencies. Canary Capital, led by Steven McClurg who previously helped launch the Valkyrie Bitcoin Fund, has submitted proposals for ETFs based on XRP, Solana, Litecoin, and HBAR (Hedera).

“The last piece of the puzzle was seeing who the new SEC chair would be – that’s what we were banking on,” McClurg told Reuters regarding his firm’s rapid expansion into new crypto product categories. With SEC Chairman Atkins taking a more favorable approach to crypto regulation than his predecessor, the industry expects a streamlined approval process for these additional products.

Projected Market Demand

While enthusiasm for new cryptocurrency ETFs remains high among providers, analysts caution that demand may not match the explosive growth witnessed with Bitcoin products. JPMorgan analyst Kenneth Worthington estimates that a fund tracking XRP, which currently has a market capitalization of $146 billion, would attract between $4 billion and $8 billion in net new assets—substantial but well below Bitcoin ETFs’ performance.

“We don’t see a next wave of cryptocurrency [exchange-traded product] launches as being meaningful for the crypto ecosystem given much smaller market capitalization of other tokens and far lower investor interest,” Worthington noted in a recent research report outlined by CNBC. This perspective suggests a more modest growth trajectory for these specialized products compared to their Bitcoin predecessors.

Innovative Fund Structures

Beyond single-cryptocurrency ETFs, the industry is developing more sophisticated investment vehicles that combine multiple digital assets or integrate novel approaches. Applications for these more complex products are already under review at the Securities and Exchange Commission.

According to ETF Trends, Bitwise has filed for the Bitwise Bitcoin and Ethereum Fund, which would give balanced exposure to both leading cryptocurrencies. Meanwhile, the Nexo 7RCC Spot Bitcoin and Carbon Credit Futures ETF aims to create an ESG-focused Bitcoin ETF that would hold approximately 80% Bitcoin and 20% carbon credit futures, addressing environmental concerns associated with cryptocurrency mining.

Regulatory Considerations

Despite the industry’s optimism, regulatory hurdles remain for these new products. The SEC’s approval process involves scrutiny of market manipulation safeguards, custody arrangements, and investor protection measures. Additionally, certain cryptocurrencies still face uncertainty regarding their classification as securities versus commodities, which affects which regulatory bodies have oversight.

“While the short-term correction has been driven by improved market sentiment, the structural drivers underpinning gold’s strength remain firmly in place,” noted Ole Hansen, head of commodity strategy at Saxo Bank, speaking to Reuters. This ongoing regulatory classification debate creates additional complexity for products based on cryptocurrencies beyond Bitcoin and Ethereum.

Options Market Development

The ecosystem surrounding crypto ETFs continues to evolve, with options markets expected to develop for these products later in 2025. These derivatives would allow investors to implement more sophisticated strategies, including hedging positions and generating income through covered call strategies.

However, these derivative products face additional regulatory complexity. According to Reuters reporting, options on cryptocurrency ETFs require approval from both the SEC and the Commodity Futures Trading Commission (CFTC), potentially extending the timeline for their introduction. Similar products for gold ETFs took over three years to secure regulatory approval.

Institutional Integration

The growing variety of cryptocurrency ETFs reflects maturing institutional interest in digital assets. Standard Chartered Bank projects that even a small allocation from the $40 trillion U.S. retirement fund market could significantly impact cryptocurrency prices, particularly for those assets with tradable ETF exposure.

“You can feel it across the space that some of the regulatory clouds are clearing and there’s blue skies ahead, but there needs to be tempered expectations of the ETFs in the coming year,” noted Tyron Ross, founder and president of registered investment advisor 401 Financial, in comments to CNBC about the evolving landscape.

Market Outlook

As 2025 progresses, attention will remain focused on the SEC’s review process for these expanded cryptocurrency investment vehicles. While approval timelines remain uncertain, the administration’s supportive stance toward financial innovation in digital assets suggests a more streamlined pathway than under previous leadership.

The combination of these new investment products, continued institutional adoption, and growing retail awareness positions cryptocurrencies for sustained integration into traditional financial frameworks. However, market participants note that this maturation process will likely feature both periods of explosive growth and consolidation as the asset class continues to evolve.