Rise in Applications for ETFs Signals Increased Interest in Crypto

Eric Balchunas, an ETF analyst, announced that the U.S. Securities and Exchange Commission (SEC) is looking over a total 72 crypto-related ETF applications.

The U.S. Securities and Exchange Commission (SEC) is currently reviewing a total of 72 crypto-related ETF applications, announced Eric Balchunas, an ETF analyst at Balchunas.com.

Among the pending applications are several noteworthy filings.

What Happened: Balchunas pointed out that the SEC is examining a variety of crypto ETFs, including spot ETFs, options products, leveraged or inverse ETFs, and more. The assets covered in these applications range from major cryptocurrencies like XRP, Litecoin (LTC), and Solana (SOL) to memecoins like Dogecoin (DOGE) and novel tokens such as a leveraged fund based on the Melania Trump token.

Among the digital assets, XRP has the highest count with 10 dedicated applications, showcasing its strong appeal to fund issuers. Solana follows closely with five filings, while Litecoin and Dogecoin each have three applications.

These assets were not selected at times. Their inclusion represents some combination of market capitalization, active user bases and investor interest. However, the broader landscape of crypto ETFs is still taking shape. The appeal of Solana lies in its renowned fast blockchain infrastructure and growing ecosystem in NFTs and DeFi.

These filings suggest that institutions are now diversifying beyond Bitcoin and Ethereum, signaling a broader interest in the cryptocurrency asset class.

Moreover, Balchunas highlighted the cultural shift that is fueling this wave of crypto ETF applications. A number of the filings indicate a change in the nature of these assets to those driven by internet culture.

Amid all the news-driven volatility, novel, risk-oriented products like a suite of leveraged and memecoin-themed ETFs — one being “Melania 2x” offered by Tuttle Capital — have gained attention for their novelty and risk-driven design.

One of the applications even includes links to Pudgy Penguins, a famous NFT project, showcasing just how deeply the spread of internet memes and digital collectibles has influenced the design of financial products.

“They might sound fringe, but these proposals show how crypto-native culture is starting to bleed into the way Wall Street makes and sells financial products,” Balchunas added.

The Coming Months Will Be Crucial: The fate of these 72 ETFs is now in the hands of the SEC, which will be making decisions over the coming months, some of which have deadlines extending into mid-2025.

Despite the recent approval of Bitcoin spot ETFs signaling a somewhat more lenient regulatory approach, the possibility of approval for an ETF covering a broad basket of crypto assets remains uncertain.

However, issuers remain hopeful. Many of the funds, including ones from ProShares and Tuttle Capital, have filed applications not only for spot exposure but also for options trading and inverse strategies, seeking to provide the flexibility for both institutional and retail investors.

This orientation to cautious regulation slowed crypto ETF progress to merely Bitcoin futures in past cycles. The current round of applications is an attempt to help accelerate crypto’s integration into traditional portfolios.

Bitcoin Still Dominant: Even with this wide range of applications, Bitcoin still stands as the cornerstone of the ETF market. Balchunas notes that 90% of all global crypto fund assets are in Bitcoin ETFs, and even with dozens of new funds being launched this year, Bitcoin’s share is likely to remain between 80% and 85%.

The number not only represents Bitcoin’s long-standing dominance, but its recognition as a safe portal for the institutional trade, especially as new entrants to crypto want simplicity and stability over experimental assets.

While ETF will surely be diversified with memecoins and altcoins, Bitcoin will most likely continue to receive the overwhelming majority of inflows due to its trustworthiness, liquidity, and familiarity from a regulatory standpoint.