Suzanne McGee
(Reuters) – What a difference a year makes.
Rewinding the clock to early January 2024, the asset management industry was anxiously watching to see whether the long-awaited debut of US spot bitcoin exchange-traded funds could live up to expectations that they would bring in as much as US$30 billion for the first time. year.
Today these issuers are opening the champagne.
This first wave of Bitcoin ETFs in 2024 raised a whopping $65 billion, helping drive the price of Bitcoin from $43,000 to over $100,000. The largest of these new products, BlackRock’s iShares Trust (NYSE:), marked the most successful debut in the 35-year history of the ETF industry.
But this is just the beginning of the party, cryptocurrency users say.
Shortly after these products celebrate their first anniversary on January 10, President-elect Donald Trump, who has vowed to become the cryptocurrency president, will be sworn in for a second time in what cryptocurrency fans believe will be a new golden era for cryptocurrencies. class of digital assets.
Applications for new and often non-standard crypto products are already piling up in the mailboxes of regulators.
“Everyone now knows how much money can be made, and with a new, friendlier administration, there’s no reason not to submit your best ideas to regulators,” said Joe McCann, founder and CEO of digital assets. Asymmetric hedge fund in Miami.
While Gary Gensler, the crypto-skeptic Biden chairman of the Securities and Exchange Commission, was forced to approve the first spot Bitcoin ETFs – and similar Ethereum products – after losing in court, he continued to warn that cryptocurrencies are highly volatile and prone to fraud and manipulation. .
Paul Atkins, Trump’s appointee to succeed Gensler, is widely known as a supporter of digital assets.
As of late November, companies such as VanEck, 21Shares and Canary Capital have capitalized on these expectations of an increasingly crypto-friendly tone in Washington, filing at least 16 applications to launch exchange-traded products tracking crypto indices or tokens such as XRP and XRP. , according to SEC filings and industry sources.
EASY ADJUSTMENT EXPECTED
The rush to launch the next wave of crypto products began weeks before the election, with many in the industry expecting lighter regulation regardless of whether Trump or his challenger, Vice President Kamala Harris, win.
“Because it takes several months to get regulatory approval and bring ETFs to market, many issuers began making calculated bets that the climate would be different this year and wanted to have their products ready for release,” Mathew said. Siegel, head of digital asset research at VanEck, which hopes to launch the Solana ETF in 2025.
In addition to XRP and Solana, which are the fourth and sixth largest coins by capitalization, according to CoinGecko, Canary has filed to launch products related to HBAR, a less widely used coin, SEC filings show.
“The last piece of the puzzle was figuring out who the new SEC chairman would be — that’s what we were counting on,” said Stephen McClurg, who led the launch of Bitcoin Fund Valkyrie in January and launched new crypto asset manager Canary. The capital in October. “Now it’s all about racing,” he added.
However, the looming crypto ETF gold rush is about more than just products tied to individual coins. New derivative products are set to debut within days of Trump’s inauguration, and new types of multi-asset or hybrid products are waiting in the wings.
Several issuers, including Calamos Investments, Innovator ETF and First Trust, have filed to create new funds that would use recently launched Bitcoin ETF options to protect investors from losses on Bitcoin itself. The first of these products are expected to be introduced on January 22, the issuers said.
Late last year, the SEC approved options on some Bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, and gave CBOE Global Markets the green light to launch options linked to the Cboe Bitcoin US ETF Index, clearing the way for this batch of new ETFs.
Federico Brokate, head of US digital asset management 21Shares, which has launched Bitcoin and Ethereum ETFs in the US, in addition to a wider range of offerings in Europe, predicted other new products could include listed funds linked to baskets of cryptocurrencies or tracking a mix alternative assets such as Bitcoin and gold.
“Product innovation in the U.S. is just getting started,” he said.
Of course, such new products are still a gamble.
While Bitcoin ETFs outperformed, an ETF launched in July tied to the world’s second-largest token, ether, attracted relatively meager inflows of $12.8 billion, according to Paris-based TrackInsight. While the price of Bitcoin more than doubled in 2024, Ethereum lagged behind the pace, gaining 53%.
Because less common coins are still in their infancy, factors influencing returns and volatility are not always clear, said Todd Sohn, ETF analyst at broker-dealer Strategas.
Although trading in Bitcoin and Ethereum futures and futures ETFs has existed in the US for several years, these are still the only coins for which a futures market exists. Son said the existence of futures trading gave regulators confidence in the breadth and depth of both Bitcoin and Ether.
It also remains to be seen how quickly Atkins will embrace the newest of the proposed products, given not only the potential risks, but also the protracted debate over whether these tokens are securities subject to the purview of the SEC.
However, this regulatory uncertainty has not dampened the enthusiasm of the crypto asset management industry.
“The only limit to new products will be human creativity,” VanEck’s Siegel said.