Source: Galaxy Research; compiled by AIMan at Jinse Finance.
Overview
On July 30, the BZX exchange of the Chicago Board Options Exchange (Cboe), Nasdaq, and NYSE Arca submitted Form 19b-4 to the U.S. SEC, proposing to establish listing standards for cryptocurrency exchange-traded funds (ETFs) and expedite the public trading process. Since the approval of the first BTC exchange-traded products (ETPs) in 2024, cryptocurrency ETF applications have surged over the past year. According to James Seyffert of Bloomberg Industry Research, there are currently 91 pending cryptocurrency ETF applications, including 24 applications for individual tokens and index fund applications (the complete list can be found in the appendix). This has led to a backlog of work for the SEC, which must complete the cumbersome approval process for this new asset class, while lacking clear guidelines on which should be approved and which should not.
The 19b-4 filing is a document submitted by self-regulatory organizations such as exchanges to the U.S. SEC to propose rule changes. Once submitted, it enters a 21-day public comment period, during which the SEC will decide whether to approve, deny, or extend the review period within an initial 45-day timeframe. The SEC can extend the review time by up to 240 days from the date of submission. The comment period for these proposals ended on August 25. The initial approval deadline is September 13, with the final approval deadline being March 27, 2026.
Although the U.S. SEC's approval cycle for cryptocurrency ETP applications has historically been the longest, in this case, the proposed rule changes will significantly alleviate the burden on the agency faced with a massive and growing number of cryptocurrency ETP applications. Coupled with the SEC's increasingly friendly stance towards cryptocurrencies, we believe the U.S. SEC may make a final decision before the March 2026 deadline.
Traditional Stock ETF Fast-Track Rules
The demand for a fast approval process for cryptocurrency ETFs has precedents in the traditional stock market, which has also experienced a similar surge in issuance. In September 2019, the SEC passed Rule 6c-11 (commonly referred to as the 'ETF Rule'), aimed at modernizing the regulatory framework for ETFs. This rule allows most standardized ETFs, such as daily portfolio transparency, flexibility in creating and redeeming portfolios, and comprehensive disclosure of net asset value (NAV), premiums/discounts, spreads, and holdings on the website, to operate under the 1940 Investment Company Act without a separate exemption order.
The passage of this rule has fundamentally transformed the ETF market. Previously, ETF sponsors had to apply case by case for exemptions, a process that could take months or even years, and now the cryptocurrency ETF industry faces the same dilemma. The ETF rule has significantly reduced the time and costs required for ETF issuance. Nowadays, the number of listed ETFs even exceeds the number of individual stocks.
Data Source: Morningstar, as of August 25.
There are clear similarities with the crypto ETF market. Just as the 6c-11 rule transformed traditional ETF from a cumbersome case-by-case approval system to a standardized fast-track system, adopting a similar approach for crypto ETFs will also bring benefits such as certainty, efficiency, and broader market access. Following the implementation of the rules in 2019, traditional ETFs saw exponential growth, indicating that when regulatory friction is reduced, innovation and investor choice can quickly expand. Today, crypto ETFs stand at the same inflection point as stock ETFs did pre-2019, although demand is immense and the market is ready, they remain stalled due to regulatory bottlenecks. A fast-track framework based on objective quantitative metrics (as described below) will allow the SEC to expand regulatory capacity without sacrificing investor protection.
Proposed Standards
Applications submitted by the Chicago Board Options Exchange (Cboe) BZX, Nasdaq, and NYSE Arca focus on three standards for tokens to qualify for fast approval. The exchanges propose that as long as any one of the conditions is met, the accompanying ETP for that token should qualify for the fast approval process. Overall, these standards aim to establish objective, standardized thresholds for tokens to qualify for fast review. They comprehensively consider market maturity, regulatory oversight, and investor familiarity.
Condition 1: 'The commodity is traded on markets belonging to cross-market surveillance organizations (ISG); however, the exchange can obtain trading information about that commodity from ISG members.'
Comment: This ensures the underlying tokens are traded on markets belonging to cross-market surveillance organizations, providing the exchanges and the U.S. SEC with the cross-market visibility needed to detect manipulation or violations.
Condition 2: 'The commodity serves as the underlying for a futures contract, and that contract has traded on a designated contract market for at least six months; provided that the exchange has entered into a comprehensive monitoring sharing agreement with that designated contract market, either directly or through ISG's common membership.'
Comment: This leverages regulated futures markets (regulated by the Commodity Futures Trading Commission, with at least six months of trading history) as signals of depth, liquidity, and established monitoring protocols.
Condition 3: 'Only in the initial phase, aimed at providing economic exposure not less than 40% of its net asset value to commodities listed and traded on national securities exchanges.'
Comment: This indicates that if traditional ETFs are already offering ≥40% asset exposure on national exchanges, then the tokens have reached a certain level of institutional recognition and market infrastructure.
Qualified Tokens
Galaxy Research reviewed the top 100 tokens by market capitalization to determine which tokens meet the above criteria or are about to qualify for fast listing (BTC and ETH are excluded from the following analysis as they already have ETFs).
A total of 10 tokens qualify for fast listing standards: DOGE, BCH, LTC, LINK, XLM, AVAX, SHIB, DOT, SOL, and HBAR. Additionally, ADA and XRP will soon qualify as they must trade on a designated contract market (DCM) for six months after their initial listing. Here are the details of the tokens that meet the fast listing standards:
Condition 1: 'No other tokens qualify besides BTC and ETH, as no tokens trade on ISG member markets. Although Coinbase's derivatives exchange is an ISG member, the tokens traded there are derivatives, not spot assets, thus not meeting this condition. This situation may change in the coming year as ongoing initiatives, including the Commodity Futures Trading Commission's (CFTC) announcement of 'Crypto Sprint' on August 1, aim to realize spot cryptocurrency trading on DCM. Additionally, Project Crypto, launched by the SEC on August 5, will explore the possibility of implementing spot cryptocurrency trading on national securities exchanges, which will substantially alter the assessment according to this standard.
Condition 2: DOGE, LINK, XLM, BCH, AVAX, LTC, SHIB, DOT, SOL, and HBAR should qualify as they have been listed on Coinbase Derivatives (which meets the definition of having a comprehensive monitoring sharing agreement with DCM) for over six months. ADA and XRP are the only tokens trading on DCM but do not meet the condition due to a lack of six months of trading history; however, they will reach six months of maturity in September and October, respectively. Among the 12 qualifying (or soon to qualify) tokens, only 9 have pending ETF applications (DOGE, LTC, LINK, AVAX, DOT, SOL, HBAR, XRP, and ADA). Given that these tokens meet the proposed fast-track rules, we believe they are more likely to launch ETFs if the rules are approved.
Condition 3: XRP and SOL may also qualify as they are both listed on national exchanges, and the net asset value of their underlying tokens is 'not less than 40%'. Strictly speaking, these ETFs are futures ETFs tracking XRP and SOL contracts, but given that futures track the spot prices of the tokens, we believe they may also qualify.
Evaluating potential future quantitative standards
While the proposal explicitly outlines the three fast listing standards above, the exchanges indicated in their submitted documents that they would also propose a 'separate rule proposal to add quantitative metrics as additional qualification standards.' The exchanges have not disclosed the specific content of these metrics, but journalist Eleanor Terett reported in July that the SEC is developing universal listing standards such as trading volume and liquidity to facilitate fast ETF approvals within 75 days of submitting S-1 documents (which IPOs and certain other new securities offerings must submit to the SEC).
Based on the report and our own assessment, potential quantitative standards include:
Trading Volume: Minimum average daily trading volume of the registered exchange during the specified review period (i.e., 30 or 90 days).
Liquidity/Spread: Demonstrates tight spreads and sufficient order book depth to support efficient ETF creation and redemption.
Market Cap/Circulating Supply: A minimum circulating market cap threshold to ensure only widely held assets qualify.
Custody/Infrastructural Readiness: There are regulated custodians capable of securely handling assets at scale.
Price History: Minimum trading history (e.g., 6-12 months) to mitigate the risk of extreme volatility in newly issued tokens.
On August 25, the cryptocurrency industry organization The Digital Chamber and investment advisor Multicoin Capital Management submitted comment letters regarding the proposed rules. Based on the above standards, both companies proposed quantitative measures requiring a minimum market cap of $500 million and an average daily trading volume of at least $50 million over the past six months. Multicoin's proposal went further, suggesting that at least 5% of global trading volume, i.e., an average daily trading volume of $10 million, occurs in the U.S. market. These requirements would allow the top 70 cryptocurrencies by market cap to qualify for fast approval, provided they also meet one of the three initial standards listed in the initial exchange fast approval criteria. This also aligns with the views of Bloomberg ETF analyst Eric Balchunas, who stated that he believes the standards 'may be loose enough that the vast majority of the top 50 cryptocurrencies could be ETF-able.'
CLARITY Act
As more tokens gain fast approval, the 'Digital Asset Market Clarification Act' (the 'CLARITY Act') may also provide more standards. This bill is currently under consideration in Congress and in consultation with the U.S. SEC. The CLARITY Act will create a unified framework for digital assets in the U.S.; delineate regulatory authority between the SEC and CFTC; confirm self-custody rights; protect developers from the constraints of money transmission laws; define when tokens should be considered securities or commodities; and allow them to escape securities treatment if sufficiently decentralized (as defined in the CLARITY Act). On July 17, the CLARITY Act received bipartisan support in the House; the Senate is currently considering similar legislation. While the exact timeline remains uncertain, Republican Senator Cynthia Lummis from Wyoming recently set a goal to send a market structure bill to the President's desk 'by the end of the year.' Ultimately, if the Senate passes some legislation, the two bills will need to be reconciled before being sent to the White House for signing into law.
According to the 'quantitative standards' in the CLARITY Act, the following additional criteria may need to be met:
Control: Having 'pre-determined and non-discretionary automated rules or algorithms' to eliminate reliance on external parties to maintain custody during trading.
Open Source: The code of the blockchain system must be completely open source and publicly accessible, with version transparency and no participation restrictions.
Node Participation: The blockchain must allow public participation in running and verifying nodes and quantify the distribution and independence of validators. Exchanges may set thresholds such as 'no fewer than X validators' or 'the stake controlled by the top five validators does not exceed 40%.
Transaction and State Changes: The system must demonstrate a fully functional, programmatic ledger capable of handling transactions transparently and predictably while updating states. Metrics may include daily trade volume, block interval, and uptime reliability.
Governance: No individual or affiliated group may hold more than 20% of governance/voting rights; decision-making must be rule-based and transparent. Exchanges may need to demonstrate decentralized governance mechanisms (on-chain voting, community proposals) and public record upgrade processes.
Decentralization Threshold: Requires broader ownership dispersion; no issuer or affiliated entity may own or control 20% or more of the total token supply.
Issuance Cap: The total value of exemptions granted during any 12-month period may not exceed $50 million.
Association Restrictions: Tokens held by insiders must be locked for 12 months before expiration, with a maximum of 10% of the supply sold each year after maturity.
As more tokens are listed on regulated futures markets, the above standards may become necessary to differentiate which assets truly embody decentralization, technical resilience, and investor protection, and which assets merely have liquidity or are widely traded. In this sense, the CLARITY Act may provide a blueprint for distinguishing those tokens that have reached sufficient maturity, worthy of inclusion in ETFs, from those that remain centralized, underdeveloped, or opaque. In summary, the combination of quantitative metrics proposed by exchanges with legislative maturity standards should be able to ensure that fast approvals cover a wide range of large-cap, well-distributed tokens while excluding projects that pose structural risks to investors and the market.
Conclusion
Lessons from the traditional ETF market are clear: a rules-based framework accelerates innovation while safeguarding investor rights. The 6c-11 rule eliminated the case-by-case exemption system in favor of transparent, standardized requirements, triggering a surge in stock ETF issuance. Cryptocurrency ETFs are now in the same situation. By adopting a similar fast approval process based on objective standards, the SEC can manage the growing backlog of applications, provide clear guidance to issuers, and expand regulatory access to digital assets.
The lack of regulation regarding cryptocurrency ETFs has not suppressed investment demand. On the contrary, it has prompted capital to shift towards alternative products such as digital asset treasury companies, private trusts, and structured products. These tools have surged as substitutes for ETFs, but they often come with higher fees, lower transparency, and weaker investor protections. The rapid growth of digital asset treasury companies (see Galaxy Digital's 'The Rise of Digital Asset Treasury Companies') indicates the scale of unmet demand and the risk of pushing investors into less-regulated channels. A transparent, rules-based ETF framework would help migrate such activities into safer, more efficient, and more regulated structures.
Regardless of the final standards, they should serve more as filters for marginal or low-volume tokens rather than barriers for mature assets that are merely delayed due to SEC jurisdiction issues. This means the next wave of ETF approvals will focus on projects that have high market caps, strong liquidity, and meet yet-to-be-determined quantitative standards. This is likely to cover all assets that have already satisfied at least one of the three standards currently proposed by the Chicago Board Options Exchange, Nasdaq, and the New York Stock Exchange.
Appendix
The complete list of unfinished ETF applications reported by James Seyffert of Bloomberg Industry Research is as follows:
