In recent years, multiple U.S. asset management firms have sought regulatory approval for cryptocurrency ETF applications. However, the U.S. Securities and Exchange Commission (SEC) has yet to greenlight any such proposals.
Industry experts suggest that the SEC's previous rejections stemmed from concerns over investor protection and financial stability due to the crypto market's immaturity. By 2021, however, market conditions began shifting.
Wave of Applications from Financial Institutions
On August 20, asset managers VanEck and ProShares withdrew their futures-based Ethereum ETF applications shortly after submission. These withdrawals reflect a broader trend: over the past decade, nearly all crypto ETF applications have faced delays, rejections, or voluntary withdrawals by applicants.
According to Wang Haifeng, Senior Researcher at OKG Research, the SEC's primary concern has been preventing fraud and market manipulation. Despite growing institutional interest, the industry hasn't yet convinced regulators that crypto ETFs can effectively mitigate these risks.
2021's Application Surge Highlights:
- 8+ financial institutions filed crypto ETF applications in August alone
- Applicants include traditional finance giants like Goldman Sachs and Fidelity
- New ETF structures emerge beyond direct crypto exposure (futures, equity-based funds)
👉 Explore how institutional crypto investments are evolving
Traditional Finance Embraces Crypto ETFs
Notably, 2021 saw traditional financial players enter the crypto ETF space:
- Goldman Sachs filed for a DeFi/blockchain equity ETF in June
- Invesco proposed a Bitcoin Strategy ETF using futures contracts
- Volt Equity designed an ETF investing in Bitcoin-holding companies
- Victory Capital filed for a private fund tracking Nasdaq's Crypto Index
Wang notes that Bitcoin's market maturity in 2021 creates new possibilities for approval.
Regulatory Uncertainty Persists
Despite hopeful signs, SEC Chair Gary Gensler maintains caution. At the Aspen Security Forum, he emphasized:
- Need for strict crypto industry regulation
- Preference for Bitcoin futures-based ETFs
- High margin requirements for investors
Key Developments:
- July 2021: SEC approved ProFunds' Bitcoin futures mutual fund
- August 25, 2021: Pending decision on SkyBridge Capital's Bitcoin ETF application
Coinbase analysts predict eventual ETF approval given growing public interest and market developments.
FAQs About Crypto ETF Approval
Q: Why does the SEC keep rejecting crypto ETFs?
A: Primary concerns include market manipulation risks and inadequate investor protections in the crypto space.
Q: What's different about 2021's ETF applications?
A: Applicants now propose diversified structures (futures, equity-based) rather than direct crypto exposure.
Q: Which traditional finance firms are entering this space?
A: Goldman Sachs, Fidelity, Invesco, and SkyBridge Capital have all filed crypto-related ETF applications.
👉 Learn why institutional crypto adoption matters
Q: What was significant about the ProFunds approval?
A: It marked the first SEC-approved Bitcoin futures mutual fund, potentially signaling openness to crypto derivatives.
Q: How might ETF approval impact crypto markets?
A: Approval could legitimize crypto assets for mainstream investors and increase market liquidity.
Q: What's the next key date for ETF watchers?
A: August 25, 2021, when the SEC must decide on SkyBridge Capital's Bitcoin ETF application.