Rewind the clock to early January 2024, and the asset-management industry was anxiously watching to see if the much-anticipated debut of U.S. spot bitcoin exchange-traded funds could live as much as expectations they might pull in as much as $30 billion of their first yr.
Today, those issuers are cracking open the champagne.
That first wave of bitcoin ETFs attracted a whopping $65 billion in 2024, helping to propel the value of bitcoin from $43,000 to greater than $100,000. The most important of those recent products, BlackRock’s iShares Bitcoin Trust, has grow to be probably the most successful debut within the ETF industry’s 35-year history.
But that is just the beginning of the party, cryptocurrency denizens consider.
Shortly after those products rejoice their first anniversary on Jan. 10, President-elect Donald Trump – who has pledged to be a crypto president – will likely be sworn in for the second time, igniting what cryptocurrency fans consider will likely be a recent golden era for the digital asset class.
Applications for brand spanking new, and infrequently novel, crypto products are already piling up in regulators’ inboxes.
“Everyone seems to be now aware of how much money there’s to be made, and with a recent, more friendly administration, there isn’t any reason to not go ahead and file your best ideas with regulators,” said Joe McCann, founder and CEO of digital assets hedge fund Asymmetric in Miami.
While Gary Gensler, Biden’s crypto-skeptic Securities and Exchange Commission chair, was forced to approve the primary spot bitcoin ETFs – and similar ethereum products – after losing a court challenge, he continued to warn that cryptos are highly volatile and beset by scams and manipulation.
Paul Atkins, Trump’s appointee to succeed Gensler, is widely seen as a supporter of digital assets.
As of late November, corporations including VanEck, 21Shares and Canary Capital had seized upon those expectations of an increasingly crypto-friendly tone in Washington by filing no less than 16 applications to launch exchange-traded products tracking crypto indices or tokens comparable to Solana and Ripple’s XRP, in keeping with SEC filings and industry sources.
LIGHTER REGULATION EXPECTED
The push to launch the following wave of crypto products began in earnest weeks before the election, with many within the industry anticipating a lighter regulatory touch no matter whether Trump or his rival, Vice President Kamala Harris, won.
“Because it takes several months to get regulatory approvals and produce an ETF to market, many issuers began making a calculated bet that this yr, the climate can be different, and desired to have their products within the queue able to go,” said Matthew Sigel, head of digital assets research at VanEck, which hopes to launch a Solana ETF in 2025.
Along with XRP and Solana, that are the fourth- and sixth-largest coins by capitalization, in keeping with CoinGecko, Canary has filed to launch products tied to Litecoin and HBAR, less widely held coins, SEC filings show.
“The last piece of the puzzle was seeing who the brand new SEC chair can be – that is what we were banking on,” said Steven McClurg, who led the launch of the Valkyrie Bitcoin Fund in January and went on to launch recent crypto asset manager Canary Capital in October. “Now, it’s off to the races,” he added.
The looming crypto ETF gold rush is about greater than just products tied to single coins, nevertheless. Recent derivative products are poised to make their debut inside days of Trump’s inauguration, and recent sorts of multi-asset or hybrid products are waiting within the wings.
Several issuers, including Calamos Investments, Innovator ETFs and First Trust, have filed for brand spanking new funds that will use recently-launched bitcoin ETF options to shield investors from losses on bitcoin itself. The primary ones of those products are expected to debut on Jan. 22, issuers say.
The SEC approved options on a number of the bitcoin ETFs late last yr, including BlackRock’s iShares Bitcoin Trust, and gave CBOE Global Markets the green light to launch options tied to the Cboe Bitcoin U.S. ETF Index – clearing the way in which for this batch of recent ETFs.
Federico Brokate, head of U.S. business for digital asset manager 21Shares, which has launched U.S. bitcoin and ethereum ETFs, along with a wider array of offerings in Europe, predicted other recent products could include listed funds tied to baskets of cryptocurrencies or that track a combination of different assets, comparable to bitcoin and gold.
“Product innovation within the U.S. is just getting began,” he said.
To ensure, such novel products are still a big gamble.
While bitcoin ETFs have outperformed, ETFs launched in July tied to the world’s second-largest token, ether, have attracted relatively meager inflows of $12.8 billion, in keeping with Paris-based TrackInsight. While bitcoin’s price greater than doubled in 2024, ether lagged that pace, gaining 53%.
Because less widely-held coins are still of their infancy, aspects that drive returns and volatility aren’t all the time clear, said Todd Sohn, ETF analyst at broker-dealer Strategas.
While trading in bitcoin and ethereum futures and futures-based ETFs has existed for several years within the U.S., to this point those are the one coins for which a futures market exists. Sohn said the existence of futures trading has given regulators confidence within the breadth and depth of each bitcoin and ether.
It also stays to be seen how rapidly Atkins will embrace probably the most novel of the proposed products, given not only the potential risks however the lingering debate over whether or not these tokens are securities that fall throughout the SEC’s purview.
Still, that regulatory uncertainty isn’t dampening the passion of the crypto asset-management industry.
“The one limit on what products emerge will likely be human creativity,” said VanEck’s Sigel.
(Reporting by Suzanne McGee; editing by Michelle Price and Rod Nickel)