Crypto markets are entering a new phase as U.S. regulators clear the path for a wave of new exchange-traded funds (ETFs), while industry giant Vanguard hints at easing its long-standing resistance to digital assets.
Key Points
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The SEC approved expedited listing standards that could accelerate launches of crypto ETFs beyond Bitcoin and Ethereum.
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Vanguard, with $11 trillion in assets, is weighing whether to allow crypto ETF trading on its platform.
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Investor flows show rotation: Bitcoin and Ethereum saw heavy outflows, while Solana and XRP attracted inflows.
Why is the SEC’s decision a game-changer for crypto ETFs?
The Securities and Exchange Commission (SEC) has approved generic listing standards for spot crypto ETFs, removing the need for case-by-case approvals. This move paves the way for faster launches of funds tied to digital assets such as Solana and XRP, beyond the existing Bitcoin and Ethereum products.
ETF experts told CNBC that within the next 60 to 90 days, investors could see a dozen new crypto-oriented ETFs hit the market. The decision also extends to traditional mutual fund companies, potentially unleashing thousands of new ETF share classes.
For investors, this means wider access and potentially more competition, which could lead to lower costs. But it also raises concerns about overcrowding and product complexity.
Is Vanguard about to embrace crypto?
Vanguard, one of the world’s largest asset managers, has long rejected cryptocurrencies, with its late founder Jack Bogle famously warning investors to “avoid Bitcoin like the plague.” Yet the appointment of Salim Ramji, a former BlackRock executive, as Vanguard’s CEO has shifted expectations.
Vanguard confirmed it is evaluating whether to allow trading of crypto-focused ETFs on its platform. While the firm does not manage its own crypto funds, opening its brokerage to existing products would give its 50 million investors direct access.
The shift reflects growing institutional pressure: Bitcoin and Ether ETFs collectively manage more than $142 billion, with BlackRock’s iShares Bitcoin Trust alone commanding $84 billion.
Why are crypto prices sliding even as ETFs gain ground?
Despite optimism around ETFs, Bitcoin recently fell 1%, Ethereum dropped nearly 3%, Solana slid almost 4%, and XRP shed close to 3% in 24 hours. The declines came as Wall Street tracked tense negotiations in Washington to avert a government shutdown.
Analysts note that Bitcoin’s correlation with stocks has been rising, meaning macro risks like U.S. fiscal uncertainty can weigh on crypto just as much as equities. At the same time, trading volumes remain subdued following the summer lull, increasing the potential for sudden swings.
“These factors could combine to create some chop in the coming days as the shutdown talk grows,” said Adam Morgan McCarthy of Kaiko. The episode highlights how crypto remains vulnerable to external shocks, even as regulatory approval boosts its legitimacy.
Are investors rotating from Bitcoin to altcoins?
Recent fund flows reveal a split. Bitcoin products saw $719 million in outflows, while Ethereum lost $409 million — the largest weekly decline this year. At the same time, Solana attracted $291 million and XRP brought in $93 million.
This suggests investors are experimenting with alternatives, possibly anticipating ETF approvals for these assets. However, altcoin inflows remain a fraction of the capital leaving Bitcoin and Ethereum. Analysts caution that liquidity in smaller tokens is limited, making them more vulnerable during market stress.
What it means for investors
The SEC’s decision and Vanguard’s potential shift underscore how crypto is becoming mainstream. But recent price declines remind investors that ETFs don’t remove volatility — they simply make access easier. For retail investors, the key is balance: ETF access offers diversification, but market risks tied to regulation, macroeconomics, and liquidity remain.
Conclusion
The crypto ETF market is expanding rapidly, backed by regulatory changes and shifting institutional attitudes. While Bitcoin dominance remains central, the next phase of growth may hinge on whether altcoins can sustain investor interest. For now, crypto ETFs are becoming harder to ignore.
FAQs
Will Vanguard really allow crypto ETF trading?
Vanguard has not confirmed a decision, but its review marks a significant shift. If approved, its 50 million clients would gain access to crypto ETFs managed by rivals like BlackRock and Fidelity.
What new crypto ETFs are likely to launch next?
Experts expect funds tied to Solana and XRP in the near term, thanks to the SEC’s expedited approval process. These would expand investor options beyond Bitcoin and Ethereum.
Is Bitcoin losing dominance to altcoins?
Not entirely. While Solana and XRP saw inflows last week, Bitcoin still anchors the market with more than $113,000 per coin and $142 billion in ETF assets. Analysts see the altcoin rotation as temporary rather than a long-term shift.
How risky are crypto ETFs compared to stocks?
Crypto ETFs are generally more volatile than traditional equity ETFs. Liquidity can be thin, and prices are sensitive to macroeconomic shifts, like Federal Reserve policy. Investors should size positions carefully.
Why do SEC decisions matter so much for crypto?
The SEC sets the rules of the road for U.S. markets. By approving generic listing standards, it removes major hurdles for fund issuers, speeding up innovation and access for investors.