SEC’s Indecision on Spot Crypto ETFs Amid Leadership Changes
In recent developments, the Securities and Exchange Commission (SEC) has acknowledged several applications for spot crypto exchange-traded funds (ETFs). However, insiders believe that the agency is unlikely to approve these products until its leadership structure is firmly established. James Seyffart, an ETF analyst at Bloomberg Intelligence, expressed his thoughts, stating, “I would have been very, very surprised if they approved any of these filings before Paul Atkins was confirmed at their first deadlines. It’s been our assumption that anything that can be pushed back until Atkins is officially at the SEC will be delayed.”
A source familiar with the situation echoed Seyffart’s sentiments, remarking, “This administration has demonstrated a willingness to break from traditional precedents. Thus, while it’s within the realm of possibility to see an early approval, I would be surprised. But you never really know.”
Former President Donald Trump nominated ex-SEC commissioner and current CEO of Patomak Global Partners, Paul Atkins, as his candidate to lead the agency. This followed the resignation of former SEC Chair Gary Gensler in January, ahead of Trump’s inauguration. As of now, no confirmation hearing has been scheduled for Atkins, adding to the uncertainty surrounding the SEC’s decision-making process.
On Tuesday, the agency opted to delay decisions on multiple spot crypto ETFs, including those linked to XRP, Solana (SOL), Dogecoin (DOGE), and Litecoin (LTC). While this move was not entirely unexpected, it raised some eyebrows among market watchers, according to Seyffart. He noted, “It took issuers years to get the SEC’s approval for launching spot Bitcoin (BTC) and Ether (ETH) ETFs, despite the existence of a well-regulated futures market for both assets. Although the SEC is not legally required to rely on this criterion for launching ETFs based on an asset, it has historically been a critical consideration for approving ETFs tied to BTC and ETH.”
Currently, none of the pending ETF applications meet the SEC’s established criteria. Still, Seyffart and his team maintain a favorable outlook, estimating a 65% or higher chance of approval for several altcoin ETFs by the end of the year. Some applications slated for decisions in May and June may have a higher likelihood of receiving approval, contingent upon the confirmation of the new chair.
Historically, the SEC has utilized procedural delays, extending deadlines for ETF applications up to 240 days—the maximum time allowed to approve or reject an application. Seyffart added, “In theory, we should have a chair by then. However, it is not guaranteed that these applications will be approved immediately. It’s certainly more plausible than the March and April deadlines for these various spot crypto assets.”
