The U.S. Securities and Exchange Commission (SEC) has postponed its decision on several high-profile cryptocurrency exchange-traded fund (ETF) applications, according to Nate Geraci, president of The ETF Store. The announcement, made public on April 30, 2025, impacts a broad range of proposed products including Franklin’s SOL and XRP ETFs, Grayscale’s HBAR ETF, Bitwise’s DOGE ETF, and staking-based Ethereum ETF proposals from Franklin and Fidelity. Additionally, the SEC delayed its review of Franklin’s broader cryptocurrency ETF and Invesco Galaxy’s physically backed Bitcoin and Ethereum ETFs that support in-kind creation and redemption mechanisms.
Despite the delay, Geraci remains confident that these financial instruments will ultimately receive approval within the year. His outlook reflects growing market optimism that regulatory hurdles are gradually giving way to institutional demand and maturing digital asset infrastructure.
Why the Delay Matters
The SEC's decision to extend its review timeline is not uncommon in the world of financial innovation—especially when it comes to digital assets. Historically, the commission has taken a cautious approach toward cryptocurrency-related products due to concerns over market manipulation, custody standards, and investor protection. However, this latest postponement does not necessarily signal rejection; rather, it underscores the complexity involved in aligning new financial instruments with existing regulatory frameworks.
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Cryptocurrency ETFs represent a pivotal bridge between traditional finance and the decentralized economy. By allowing investors to gain exposure to digital currencies like Solana (SOL), Ripple (XRP), Dogecoin (DOGE), and Hedera (HBAR) through regulated brokerage accounts, these funds lower entry barriers for retail and institutional participants alike. This accessibility is particularly valuable for those who prefer not to manage private keys or navigate crypto exchanges directly.
The Growing Demand for Diversified Crypto Exposure
One of the most significant aspects of the current wave of ETF applications is their diversity. Unlike early filings focused solely on Bitcoin or Ethereum, today’s proposals span a wider spectrum of blockchain ecosystems:
- Franklin’s SOL and XRP ETFs aim to bring institutional-grade access to two of the largest non-Bitcoin cryptocurrencies.
- Grayscale’s HBAR ETF targets exposure to Hedera Hashgraph, a high-throughput distributed ledger technology used in enterprise applications.
- Bitwise’s DOGE ETF responds to sustained retail interest in meme coins, despite their volatility.
- Staking-based Ethereum ETFs from Franklin and Fidelity offer yield-generating potential through proof-of-stake mechanisms, adding an income dimension to crypto investing.
These developments indicate that the market is moving beyond simple price speculation toward more sophisticated investment strategies. Investors are no longer just buying crypto—they’re seeking yield, diversification, and risk-managed exposure.
Physical Creation and Redemption: A Game Changer
A key highlight among the delayed applications is Invesco Galaxy’s proposal for physically backed Bitcoin and Ethereum ETFs with in-kind creation and redemption. This mechanism allows authorized participants to exchange baskets of underlying assets (e.g., actual BTC or ETH) for ETF shares, enhancing transparency and reducing counterparty risk.
This model has proven successful in other commodity ETFs, such as gold-backed funds, where physical backing ensures price alignment with the spot market. Applying it to crypto strengthens investor confidence by minimizing reliance on futures contracts or third-party custodians.
Experts believe that once approved, such ETFs could significantly boost liquidity and reduce premium/discount volatility commonly seen in existing crypto investment vehicles.
Regulatory Evolution in a Maturing Market
While regulatory uncertainty persists, the trend toward eventual approval appears inevitable. The SEC’s incremental progress—approving Bitcoin spot ETFs in 2024, followed by cautious evaluation of Ethereum and multi-asset products—suggests a deliberate but forward-moving stance.
Market maturity plays a crucial role. With improved security protocols, deeper liquidity pools, and stronger compliance frameworks across major exchanges and custodians, the ecosystem now better satisfies many of the SEC’s original concerns.
Moreover, global precedents are setting momentum. Countries like Canada and Australia have already launched diverse crypto ETFs, demonstrating that responsible innovation can coexist with investor safeguards.
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What This Means for Investors
For investors, the potential approval of these ETFs means:
- Greater portfolio diversification across multiple blockchain platforms.
- Enhanced regulatory oversight, reducing fraud and operational risks.
- Easier integration into traditional brokerage accounts, enabling seamless allocation alongside stocks and bonds.
- Access to staking rewards without technical complexity, particularly relevant for Ethereum-based products.
Even though approval timelines remain fluid, the overall trajectory points toward broader acceptance. Analysts expect final decisions on most pending applications within the next several months, barring unforeseen legal or market disruptions.
Frequently Asked Questions (FAQ)
Q: What does the SEC delay mean for crypto ETF applicants?
A: A delay is not a denial. The SEC often extends review periods to gather more data or address compliance questions. It reflects due diligence rather than opposition.
Q: Will XRP or SOL ETFs be approved in 2025?
A: While no guarantees exist, growing institutional interest and clearer regulatory clarity increase the likelihood. Final rulings may hinge on ongoing court interpretations and market stability.
Q: How do staking-based Ethereum ETFs work?
A: These funds allow investors to earn staking rewards indirectly by holding ETF shares. The issuer stakes the underlying ETH on behalf of shareholders, distributing yields after fees.
Q: Are physically backed crypto ETFs safer than futures-based ones?
A: Yes. Physically backed ETFs hold actual digital assets, offering greater transparency and alignment with spot prices. Futures-based funds face roll costs and basis risk.
Q: Can retail investors benefit from these ETFs?
A: Absolutely. These products simplify access to complex assets, eliminate self-custody risks, and enable tax-efficient investing through IRAs and taxable accounts.
Q: What happens if an ETF is rejected?
A: Issuers can revise filings and resubmit. Rejection often leads to improved structures that better meet regulatory standards—many Bitcoin ETFs went through multiple revisions before approval.
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Final Outlook: Inevitable Approval Amid Measured Regulation
While the SEC’s latest delay introduces short-term uncertainty, the long-term direction is clear: regulated crypto ETFs are becoming a permanent fixture in modern finance. As investor demand grows and market infrastructure strengthens, regulatory bodies are adapting—not resisting.
The approval of diversified, staking-enabled, and physically backed cryptocurrency ETFs would mark a transformative milestone, further legitimizing digital assets as a viable asset class. For both traditional investors and crypto natives, this evolution promises greater access, transparency, and opportunity.
As we move deeper into 2025, all eyes will remain on Washington. But the momentum is undeniable—and the future of crypto investing looks more inclusive than ever.
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