Bitcoin ETFs Kick-Start a Crypto Gold Rush, With More Products Coming After Trump Takes Office

By Suzanne McGee (Reuters) - What a difference a year makes.

A year ago, the asset-management industry was abuzz with anticipation over the impending debut of U.S. spot bitcoin exchange-traded funds, hoping they would attract up to $30 billion in their first year.

Now, those issuers are popping the champagne corks.

That first wave of bitcoin ETFs pulled in a massive $65 billion in 2024, helping to propel the price of bitcoin from $43,000 to more than $100,000. The largest of those new products, BlackRock's (NYSE:BLK) iShares Bitcoin Trust, has become the most successful debut in the ETF industry's 35-year history.

But that's just the beginning of the party, cryptocurrency enthusiasts believe.

Shortly after those products celebrate their first anniversary on Jan. 10, President-elect Donald Trump - who has promised to be a crypto president - will be sworn in for the second time, ushering in what cryptocurrency fans believe will be a new golden era for the digital asset class.

Applications for new, and often exotic, crypto products are already piling up in regulators' inboxes.

“Everyone is now aware of how much money there is to be made, and with a new, more favorable administration, there's no reason not to go ahead and file your best ideas with regulators,” said Joe McCann, founder and CEO of digital assets hedge fund Asymmetric in Miami.

While Gary Gensler, Biden's crypto-skeptic Securities and Exchange Commission chair, was forced to approve the first spot bitcoin ETFs - and similar ethereum products - after losing a court challenge, he continued to warn that cryptos are highly volatile and plagued by scams and manipulation.

Paul Atkins, Trump's appointee to succeed Gensler, is widely seen as a supporter of digital assets.

Companies including VanEck, 21Shares and Canary Capital had seized upon those expectations of an increasingly crypto-friendly tone in Washington by filing at least 16 applications to launch exchange-traded products tracking crypto indices or tokens such as Solana and Ripple's XRP, as of late November, according to SEC filings and industry sources.

The push to launch the next wave of crypto products began in earnest weeks before the election, with many in the industry expecting a lighter regulatory touch regardless of whether Trump or his rival, Vice President Kamala Harris, prevailed.

“Since it takes several months to get regulatory approvals and bring an ETF to market, many issuers began making a calculated bet that this year, the climate would be different, and wanted to have their products in the queue ready to go,” said Matthew Sigel, head of digital assets research at VanEck, which is hoping to launch a 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 tied to Litecoin and HBAR, less widely held coins, SEC filings show.

“The last piece of the puzzle was seeing who the new SEC chair would be - that's what we were banking on,” said Steven McClurg, who led the launch of the Valkyrie Bitcoin Fund in January and went on to launch new crypto asset manager Canary Capital in October. “Now, it's off to the races,” he added.

The looming crypto ETF gold rush is about more than just products tied to single coins, however. New derivative products are set to make their 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 ETFs and First Trust, have filed for new funds that would use recently-launched bitcoin ETF options to shield investors from losses on bitcoin itself. The first ones of those products are expected to debut on Jan. 22, issuers say.

The SEC approved options on some of the bitcoin ETFs late last year, including BlackRock's iShares Bitcoin Trust, and gave CBOE Global Markets the go-ahead to launch options tied to the Cboe Bitcoin U.S. ETF Index - paving the way for this batch of new ETFs.

Federico Brokate, head of U.S. business for digital asset manager 21Shares, which has launched U.S. bitcoin and ethereum ETFs, in addition to a wider array of offerings in Europe, predicted other new products could include listed funds tied to baskets of cryptocurrencies or that track a mix of alternative assets, such as bitcoin and gold.

“Product innovation in the U.S. is just getting started,” he said.

To be sure, such novel products are still a gamble.

While bitcoin ETFs have outperformed, ETFs launched in July tied to the world's second-largest token, ether, have attracted relatively meager inflows of $12.8 billion, according to Paris-based TrackInsight. While bitcoin's price