Key Takeaways
- Cboe BZX Exchange proposes rule changes to allow automatic listing of crypto ETFs meeting set criteria.
- The new framework removes the need for case-by-case SEC approval for qualifying commodity-based trust shares.
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Cboe BZX Exchange has filed a proposed rule change with the SEC that would allow for the automatic listing of commodity-based trust shares, such as spot Bitcoin or Ethereum ETFs, without requiring separate SEC approval for each fund.
Currently, each crypto ETF requires its own SEC rule change proposal, a time-consuming and often politicized process. Cboe’s bid to modernize this structure mirrors what already exists for many equity and fixed-income ETFs.
“This is the Framework and Generic listing standards we’ve been looking for with regards to digital assets in an ETF wrapper,” Bloomberg ETF analyst James Seyffart commented on the filing. “This is a pretty Big deal.”
The proposal aims to create a standardized framework for crypto ETFs, enabling those that meet specific criteria, like using regulated custodians, maintaining reliable pricing mechanisms, and disclosing daily holdings, to be listed through a streamlined process. This would eliminate the current requirement for individual, often lengthy and politicized, SEC rule change approvals.
The proposal also establishes continuing listing standards and trading halt rules. Trusts would need to maintain surveillance procedures and could face delisting if they fail to meet ongoing requirements around minimum shares outstanding, market value, and information dissemination.
While the proposal doesn’t mention any specific products, its scope is broad enough to include future listings of ETFs holding Bitcoin, Ethereum, or other digital assets, provided they meet the criteria.
According to journalist Eleanor Terrett, the SEC has initiated early-stage discussions with exchanges regarding the creation of a standardized listing framework for crypto ETFs.
The Commission is exploring ways to streamline the approval process, potentially allowing certain ETFs to bypass the traditional 19b-4 rule-change filings.
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