Encryption ETF Regulatory New Chapter: Physical Creation and Redemption Approved, Universal Listing Standards Coming Soon

The US encryption ETF market is undergoing significant changes. Regulatory agencies have recently made a series of important decisions, not only allowing the physical subscription and redemption mechanism for encryption ETFs but also likely to introduce universal listing standards, paving a fast track for encryption assets to enter the ETF market.

Physical redemption mechanism approved, improving trading efficiency

Recently, regulatory authorities officially approved participants to subscribe and redeem encryption ETPs in physical form. This decision will significantly enhance trading efficiency and market liquidity.

Previously, the Bitcoin and Ethereum spot ETFs used a cash creation and redemption mechanism, resulting in high trading costs, settlement delays, and significant market slippage risks. The new mechanism allows authorized participants to directly deliver encryption assets to create or redeem ETF shares, further facilitating the connection between on-chain assets and traditional financial products.

A senior regulator stated that this approval will reduce product costs, improve operational efficiency, and ultimately benefit investors, promoting the construction of a rational and clear encryption regulatory system.

Industry analysts believe that this decision paves the way for other encryption ETF products that are about to be approved. It is expected that the upcoming approved altcoin ETFs will also likely allow for physical subscription and redemption from the start.

In addition, regulators have approved a series of proposals to promote the development of the encryption asset market, including the listing application for a hybrid spot Bitcoin and Ethereum ETP, specific Bitcoin spot ETP options trading, etc., enriching market tools and enhancing flexibility.

Encryption ETP General Listing Standards Are Urgently Needed

In addition to breakthroughs in operational models, the listing channels for encryption ETPs have also undergone significant optimization. A certain exchange has submitted a proposal for a rule amendment to the regulatory authorities, aiming to establish universal listing standards for commodity-based trust shares (CBTS).

This proposal provides a comprehensive upgrade to the existing rules, breaking through the original limitation of a single product. The new regulations clarify the flexible issuance forms of trust shares and significantly broaden the range of assets that can be held. At the same time, the proposal also specifies three categories of underlying assets that can be directly listed, creating a unified and transparent "listing means access" mechanism.

In addition, the proposal also strengthens the requirements for market transparency and investor protection, stipulating that CBTS issuers must publicly disclose core information, including daily holdings, net asset value, and other data. It is worth mentioning that the proposal also supports the introduction of encryption staking mechanisms, providing more possibilities for product design and revenue models.

According to industry insiders, this regulation is likely to be finalized in less than 60 days. Once approved, it will open up an efficient and transparent listing channel for commodity ETPs, including encryption assets.

Potential Beneficiaries Under New Regulations

The introduction of the universal listing standards for encryption ETPs may benefit multiple parties.

First, a certain trading platform may become the "certification center" for altcoins to access ETFs. As long as an asset's futures have more than 6 months of compliant trading records on the contract market of that platform, it qualifies for general listing. In addition, due to the new proposal supporting the staking mechanism, relevant institutions will also benefit from it.

Secondly, the regulatory trends are becoming increasingly clear. In the future, which encryption assets can enter the ETF will be indirectly influenced by the relevant regulatory agencies through controlling their futures listings.

Finally, the new regulations will also promote the rapid approval and listing of more altcoin ETF products. According to analysts' estimates, there are currently about a dozen eligible encryption assets, which aligns with previous market expectations. These products may be launched in the fourth quarter of this year, including physical delivery and staking rewards for certain tokens.

Overall, these regulatory trends signify that the U.S. encryption ETF market is ushering in new development opportunities. With the easing of the physical creation and redemption mechanism and the establishment of universal listing standards, the integration of encryption assets with traditional financial markets will deepen further, providing investors with more diversified and efficient investment options.