Author: André Beganski, Decrypt
Compiled by: Felix, PANews
This year, as the U.S. SEC adopted a new regulatory approach to cryptocurrency products, ETFs opened multiple doors for the crypto market on Wall Street.
Although asset management companies had previously made great efforts to launch products tracking the spot prices of Bitcoin and Ethereum, the regulatory environment began to change when Donald Trump returned to the presidency in January, with many companies foreseeing potential market opportunities in 2025.
Regarding Bitcoin, according to data from Farside Investors, as of December 15, since their initial launch in January 2024, spot Bitcoin ETFs have accumulated net inflows of $57.7 billion, a 59% increase from $36.2 billion at the beginning of the year. However, the inflows have not been stable.
For example, according to CoinGlass data, on October 6, as Bitcoin approached its all-time high of $126,000, investors poured $1.2 billion into spot Bitcoin ETFs. A few weeks later, on November 11, as Bitcoin fell below $90,000, investors withdrew $900 million from these funds.
Still, this was only the second worst day on record for spot Bitcoin ETFs: in February of this year, due to concerns about trade and inflation, these products experienced a $1 billion outflow as Bitcoin prices plummeted.
Regarding Ethereum, according to CoinGlass data, since their initial launch in July of last year, as of December 15, spot Ethereum ETFs have achieved net inflows of $12.6 billion. Among these, in August, as Ethereum surged to a near all-time high of $4,950, these ETFs attracted $1 billion in inflows in a single day.
As signs of adoption by financial institutions become increasingly evident, some are focusing on the prospects of more ETFs that could drive up the prices of digital assets or expand access for new investors. However, others are paying relatively more attention to ETFs that simultaneously track multiple cryptocurrencies, believing such products are suitable for institutional investors.
Establishing Universal Standards
In September, the U.S. SEC approved a universal listing standard for commodity-based trust shares, a move aimed at responding to market expectations that had been heating up for months.
The SEC's desk was piled high with ETF applications covering a wide variety of digital assets. Whether these applications would be approved depended on a question that the previous SEC leadership had avoided for years: under what circumstances should a digital asset be considered a commodity?
With the new standards in place, the SEC is no longer forced to make case-by-case determinations on the eligibility of various cryptocurrencies, from Dogecoin to presidential meme coins. Instead, it has set uniform conditions for exchanges to determine whether a digital asset meets the standards for a commodity trust fund.
The most important factors include: the digital asset covered by the ETF must be traded on a regulated market and have at least six months of futures trading history, or it must already support an ETF with significant exposure.
In an interview in September, Bloomberg Senior ETF Analyst Eric Balchunas said this means at least a dozen cryptocurrencies could immediately "qualify for listing." In his view, this move was in line with expectations.
Recently, on platform X, Bloomberg Senior Research Analyst James Seyffart stated that the approval of the universal listing standard is expected to significantly increase the number of products available to investors, but asset management companies are still awaiting approval for at least 126 ETFs.
These applications primarily focus on tokens from emerging decentralized finance projects (such as Hyperliquid) and some relatively new meme coins, like Mog.
Related reading: SEC's New Rules Open the Floodgates for Crypto ETFs, 10 Spot ETFs Expected to Launch?
XRP and Solana
Following Bitcoin and Ethereum, U.S. investors can now invest through ETFs tracking the spot prices of XRP and Solana, along with a variety of other digital asset-related products.
As the fifth and seventh largest digital assets by market capitalization, respectively, both XRP and Solana faced regulatory pressure during the Biden administration. However, as they become the underlying assets for an increasing number of products, this pressure is gradually easing.
Last year, the launch of spot Bitcoin ETFs sparked a surge in demand and drove Bitcoin prices to new highs. Although this effect was not fully replicated for cryptocurrencies with smaller market capitalizations, ETF products specifically targeting XRP and Solana still attracted significant investor interest.
Juan Leon, Senior Investment Strategist at Bitwise, said: "I don't think the impact of ETFs on prices has met people's expectations, but in terms of the uniqueness of the products, they have been hugely successful and have proven that investors are also interested in assets other than Bitcoin and Ethereum."
Juan Leon believes the timing of the Solana and XRP ETF launches in November was "not ideal" because macroeconomic conditions have led to lower digital asset prices in recent months.
Despite this, the inflow data remains impressive. According to CoinGlass data, as of December 15, spot Solana ETFs have achieved net inflows of $92 million since their launch; spot XRP ETFs, launched in the same month, have accumulated approximately $883 million in net inflows.
The launch of Solana ETFs is notable for another reason: they are among the first ETFs to share a portion of staking rewards with investors. This development was facilitated by new guidelines issued by the U.S. Treasury Department and the IRS last month.
Although BlackRock, the world's largest asset management company, is one of the institutions that has so far not expanded its cryptocurrency-related products to more assets, Leon pointed out that the XRP and Solana communities may not need these products.
"Judging from how the ETFs are performing currently, the engagement, strength, and scale of these communities far exceed many people's expectations. I think this is a good sign for the development of both ecosystems in 2026."
For example, according to SoSoValue data, as of December 15, the net inflow for the Dogecoin spot ETF was $2 million.
Index Wars?
According to Gerry O’Shea, Global Head of Market Analysis at Hashdex Asset Management, in 2025, the main holders of spot cryptocurrency ETFs will likely still be individual investors and hedge funds, but this trend is expected to change significantly soon.
Gerry O’Shea stated that many advisors and professional investors are still conducting due diligence on ETFs tracking cryptocurrencies, but he predicts these institutions will soon seriously consider allocations to this asset class.
On the other hand, Vanguard Group indicated earlier this month that it will allow its 50 million clients to trade some spot cryptocurrency ETFs on its brokerage platform. Meanwhile, Bank of America has also approved modest cryptocurrency allocations for private wealth clients starting next year.
About a year ago, the regulatory environment was still fraught with uncertainty, and many institutions were not ready to enter this field. Now, the market's focus has shifted from whether to get involved to how to get involved.
In this sense, Gerry O’Shea believes that ETFs tracking digital asset indices will play a more prominent role in discussions next year. He stated that many professional investors prefer the structure of funds whose holdings adjust dynamically over time, which gives them relative peace of mind.
Gerry O’Shea explained: "They can invest in index ETFs to gain broad exposure to the market's growth potential without needing all that detailed knowledge. They don't have to be experts on every single asset."
For example, in February of this year, Hashdex launched the first spot ETF in the U.S. that tracks multiple digital assets: the Hashdex Nasdaq Crypto Index ETF. This ETF is based on the Nasdaq Crypto Index and holds Cardano, Chainlink, Stellar, among other mainstream cryptocurrencies.
Additionally, companies like Franklin Templeton, Grayscale, Bitwise, 21Shares, and CoinShares have also launched similar products, some of which gain exposure to digital assets through derivatives. According to ETF Trends data, this series of index ETFs collectively provides investors with exposure to 19 digital assets.
Regarding institutional investors, although some U.S. pension funds purchased spot Bitcoin ETFs, the State of Wisconsin Investment Board liquidated approximately $300 million in holdings around February. This move was disclosed through the 13F filings submitted quarterly by large institutional investors.
Meanwhile, allocations from the Middle East and academic institutions have been more proactive. For example, Al Warda Investments disclosed a $500 million position in BlackRock's spot Bitcoin ETF in November. This investment company is associated with the Abu Dhabi Investment Council (a subsidiary of Mubadala Investment Company), which is the sovereign wealth fund of Abu Dhabi.
Mubadala Investment Company itself also disclosed a position in BlackRock's product in February; according to its latest 13F filing, the position was valued at $567 million. Around the same time, Harvard University's endowment held $433 million worth of BlackRock's ETF. Brown University and Emory University also disclosed their holdings of spot Bitcoin ETFs this year, becoming among the earliest institutional-level adopters of this asset.
Analysts generally believe that this shift by institutional investors could reduce Bitcoin's volatility and narrow its drawdowns.
Gerry O’Shea, speaking about the expansion of the investor base, said: "While the change isn't dramatic, it is certainly noteworthy. This transition from retail to institutional is very beneficial for the long-term sustainability of assets like Bitcoin, as these institutional investors have longer investment horizons."
Related reading: Taking Root in the Ruins: The Extreme Divergence of the Altcoin ETF Market
