A new wave of cryptocurrency exchange-traded funds (ETFs) is poised to hit the market in 2025, with a Bitcoin and Ether combo fund expected to be the first of many, according to senior Bloomberg ETF analyst Eric Balchunas. The anticipated surge in crypto funds is expected to play a pivotal role in shaping the future of digital asset investment.
Balchunas, in a post shared to X (formerly Twitter) on December 17, revealed that a Bitcoin and Ether ETF would likely be the first in a series of new cryptocurrency-focused funds. He referenced an analysis from fellow Bloomberg analyst James Seyffart, who pointed to this new fund as the leading candidate for approval. The launch of this Bitcoin-Ether ETF would open the floodgates for other crypto-related funds in 2025, although not all are expected to be approved simultaneously.
“The first Bitcoin-Ether combo fund will likely be followed by ETFs tracking other popular digital assets like Litecoin (LTC) and Hedera (HBAR),” Balchunas noted in his post. This wave of crypto ETFs would cater to growing institutional demand for crypto exposure in traditional investment vehicles, such as ETFs.
While the Bitcoin-Ether fund seems imminent, the approval of other digital asset ETFs will likely follow a more gradual timeline. According to Seyffart, assets like Litecoin and Hedera are expected to receive favorable regulatory scrutiny compared to more controversial cryptocurrencies like Solana (SOL) and XRP, which are currently facing legal challenges with the U.S. Securities and Exchange Commission (SEC).
Balchunas and Seyffart believe that Litecoin, a Bitcoin fork, is more likely to be approved first due to its perceived status as a commodity, akin to Bitcoin itself. “Litecoin’s status as a fork of Bitcoin gives it a clearer classification as a commodity, which is a favorable characteristic for approval under current SEC rules,” Balchunas explained.
Hedera (HBAR), on the other hand, has not been classified as a security by the SEC, making it a strong candidate for an ETF approval. This lack of regulatory uncertainty provides a clear path for Hedera to potentially launch an ETF before other assets like Solana or XRP, which are embroiled in legal battles over their classification as securities.
While the analysts expect Litecoin and Hedera to have higher odds of ETF approval, Solana (SOL) and XRP (XRP) face more significant hurdles. Solana has already been rejected by the SEC for an ETF approval, and its status as a security remains uncertain. XRP, too, is locked in a protracted legal dispute with the SEC, as the agency seeks to classify it as a security. The ongoing legal battle between Ripple (XRP’s parent company) and the SEC is unlikely to be resolved before the launch of these new crypto ETFs.
According to Seyffart, the approval of Solana and XRP ETFs would likely have to wait until the SEC undergoes a potential leadership change. Former President Donald Trump has hinted at nominating a more crypto-friendly SEC chair in the future, which could shift regulatory attitudes toward digital assets. This possibility has led some pundits to speculate that under a new SEC chair, crypto-friendly policies might open the door for approval of more altcoin ETFs.
One of the key developments that may influence the crypto ETF landscape is the upcoming leadership change at the SEC. Current SEC Chair Gary Gensler is set to resign on January 20, 2025, coinciding with Trump’s inauguration. Gensler’s departure, along with the potential resignation of other commissioners, could create a pro-crypto shift at the SEC.
Trump has indicated plans to nominate Paul Atkins, a former SEC Commissioner known for his pro-crypto stance, as the new SEC chair. Legal experts suggest that Atkins’ appointment could signal a wave of de-regulation and pro-crypto policies, possibly accelerating the approval of various crypto ETFs, including those tracking Solana and XRP. As it stands, Solana and XRP ETFs are unlikely to receive approval under the current SEC regime due to their securities classification.
The launch of Bitcoin and Ether ETFs would mark the beginning of a new era for cryptocurrency investments, particularly for traditional investors who have been hesitant to enter the volatile crypto market. By offering a regulated and familiar product like an ETF, the financial industry is likely to see increased institutional participation in the crypto space.
Moreover, the potential approval of funds tracking assets like Litecoin and Hedera could further expand investor access to digital assets in a regulated environment. However, despite the promise of these new products, there is still uncertainty around the level of investor demand, especially in the case of altcoins.
The key to the future success of crypto ETFs will be continued market confidence in regulatory clarity, as well as the SEC’s stance on digital assets like Solana, XRP, and others. For now, the upcoming changes at the SEC could shape the entire crypto landscape, making 2025 a pivotal year for the growth of cryptocurrency ETFs.
The expected wave of cryptocurrency ETFs in 2025, starting with a Bitcoin-Ether combo fund, reflects growing institutional interest in digital assets. While assets like Litecoin and Hedera are likely to see approval first due to their favorable regulatory standing, the SEC's position on XRP and Solana will be crucial for their future ETF prospects. The potential for a more crypto-friendly SEC under Donald Trump’s leadership could also play a significant role in the broader adoption of cryptocurrency ETFs.
December 2024, Cryptoniteuae