A Year of Transformation for Crypto ETFs
Rewind to early January 2024, when the asset-management industry anxiously awaited the debut of U.S. spot Bitcoin exchange-traded funds (ETFs). Optimistic forecasts predicted these funds could amass up to $30 billion in their first year.
Fast forward to today, and the results have far exceeded expectations.
In 2024, the initial wave of Bitcoin ETFs drew an astonishing $65 billion, driving Bitcoin’s price from $43,000 to over $100,000. Among these, BlackRock’s (NYSE:BLK) iShares Bitcoin Trust became the most successful ETF launch in the industry’s 35-year history.
Yet, for cryptocurrency enthusiasts, this is just the beginning.
As these groundbreaking ETFs celebrate their first anniversary on January 10, President-elect Donald Trump—who has vowed to be a pro-crypto president—will be inaugurated for his second term. This event is fueling hopes of a new golden age for digital assets.
A Flood of New Applications
Applications for innovative crypto products are flooding regulatory offices. Joe McCann, founder and CEO of the digital assets hedge fund Asymmetric, noted, “With a more crypto-friendly administration on the horizon, there’s no reason not to pitch your best ideas to regulators.”
Former SEC Chair Gary Gensler, who reluctantly approved the first spot Bitcoin and Ethereum ETFs after a court defeat, frequently cautioned about the risks of cryptocurrencies, citing volatility, scams, and manipulation. However, his successor, Paul Atkins—Trump’s appointee—is perceived as a strong advocate for digital assets.
By late November, firms like VanEck, 21Shares, and Canary Capital had filed at least 16 applications for ETFs tracking crypto indices or tokens, including Solana and Ripple’s XRP, per SEC filings and industry insiders.
A Shift Toward Lighter Regulation
The race to develop the next wave of crypto products began even before the election, with the industry anticipating a lighter regulatory touch, regardless of whether Trump or Vice President Kamala Harris won.
“Regulatory approval can take months, so many issuers strategically positioned their products in anticipation of a more favorable environment,” explained Matthew Sigel, head of digital assets research at VanEck, which aims to launch a Solana ETF in 2025.
In addition to XRP and Solana—the fourth- and sixth-largest cryptocurrencies, according to CoinGecko—Canary Capital has filed to launch ETFs tied to Litecoin and HBAR, according to SEC records.
“The final piece of the puzzle was the appointment of a new SEC chair,” said Steven McClurg, who led the launch of the Valkyrie Bitcoin Fund and later founded Canary Capital. “Now, it’s full steam ahead.”
Beyond Single-Coin ETFs
The crypto ETF gold rush extends beyond single-asset products. Derivatives and hybrid funds are poised for launch shortly after Trump’s inauguration. For example, Calamos Investments, Innovator ETFs, and First Trust are developing funds that use Bitcoin ETF options to shield investors from losses in Bitcoin. These products are expected to debut by January 22.
The SEC’s recent approval of options for ETFs, including BlackRock’s iShares Bitcoin Trust and the CBOE Bitcoin U.S. ETF Index, has paved the way for this new wave of innovation.
Federico Brokate, head of U.S. business for digital asset manager 21Shares, foresees even more diversification, with potential ETFs tied to baskets of cryptocurrencies or alternative asset mixes like Bitcoin and gold. “Product innovation in the U.S. is just beginning,” he said.
The Risks of Novelty
Despite the success of Bitcoin ETFs, new offerings still carry risk. For instance, Ethereum ETFs, launched mid-2024, attracted relatively modest inflows of $12.8 billion, according to TrackInsight. While Bitcoin’s price more than doubled in 2024, Ethereum’s growth lagged at 53%.
The future of crypto ETFs remains bright, but as the market evolves, issuers and investors alike must navigate the complexities of this rapidly expanding landscape.
