The cryptocurrency industry is bracing for a potential surge in exchange-traded funds (ETFs) after Donald Trump's election win, signaling what experts believe could be a transformative era for digital assets in the U.S.
What Happened: Market participants are hopeful that a pro-crypto Trump administration will end regulatory gridlock and usher in broader approval for innovative crypto-based financial products, according to a Financial Times report.
The Securities and Exchange Commission's (SEC) recent approval of spot Bitcoin and Ethereum ETFs marked a significant milestone after years of regulatory pushback.
However, filings for ETFs tied to other digital assets like Solana SOL/USD, Ripple XRP/USD and Litecoin LTC/USD have yet to make headway.
Comparatively, Europe has been more accepting, offering exchange-traded products tied to about 30 cryptocurrencies, according to ETFbook data.
Industry leaders are hopeful that Trump's administration will replace SEC Chair Gary Gensler, whose tenure has been marked by strict enforcement actions against the crypto industry.
Trump has pledged to position the U.S. as a "bitcoin superpower," fueling optimism for more supportive policies.
"This election was a massive win for crypto," said Matt Hougan, Chief Investment Officer of Bitwise Asset Management, which has filed for an XRP ETF.
"For the past four years, crypto has operated with major regulatory uncertainty. Imagine what happens when those headwinds are removed."
VanEck's head of digital asset research, Matt Sigel, echoed these sentiments, describing the election as a turning point for the crypto industry.
"The SEC's regulation by enforcement approach under Gensler stifled innovation. A return to a disclosure-based system could pave the way for more digital asset ETFs," Sigel noted.
He expects a Solana ETF to be trading in the U.S. by the end of next year.
Asset managers are gearing up for what could be a flood of new crypto products. VanEck, buoyed by Trump's victory, has revived its focus on developing digital asset ETFs.
Canary Capital recently filed for an HBAR ETF, adding to its existing applications for Solana, XRP and Litecoin ETFs.
Also Read: Bitcoin, Dogecoin Success Driven By ‘Narrative And Momentum,’ Report Argues
Why It Matters: The market rally following Trump's election has underscored the pent-up demand for crypto innovation.
Solana, XRP and similar tokens have surged by 30% since the results, reflecting optimism for more supportive regulation and the potential approval of exotic crypto ETFs.
In Europe, nearly 30% of the $13 billion market for digital asset ETFs consists of basket products and offerings beyond Bitcoin BTC/USD and Ethereum ETH/USD.
If mirrored in the U.S., these more specialized products could see demand reaching $55 billion, based on ETFbook's projections.
Townsend Lansing, head of product at CoinShares, Europe's largest provider of digital asset ETFs, sees regulatory clarity as crucial for U.S. market growth.
"A comprehensive legislative regime alongside traditional securities laws is completely missing in the U.S.," Lansing stated.
He argued for a nuanced approach to regulating cryptocurrencies as commodities or securities, a contentious issue under Gensler's SEC.
While optimism abounds, industry leaders caution that regulatory clarity should not devolve into a "free-for-all." Hougan emphasized the need for balanced oversight, saying, "We want a dialogue-driven approach, not regulatory chaos."
The potential regime change could reposition the U.S. as a global hub for digital assets. Sigel highlighted that over the past four years, the SEC's actions pushed much of the innovation abroad.
"We're looking forward to the U.S. reclaiming its position as a leader in product development, from ETFs to stablecoins and NFT platforms," he added.
What’s Next: The impact of these developments will be explored in depth at Benzinga's Future of Digital Assets event on Nov. 19, where industry experts will discuss the evolving landscape of crypto regulation and innovation.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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