From futures to spot: Approval of spot altcoin ETFs is imminent

Journalist Eleanor Terrett explains why altcoin spot ETFs like XRP and Solana require explicit SEC approval and how they could be defined this month.

The cryptocurrency market is at a regulatory turning point. Following the approval of Bitcoin and Ethereum spot ETFs in 2024, attention is now turning to altcoin spot ETFs such as XRP, Solana, and Litecoin, among others. These financial products, which would allow investors to access cryptocurrencies without having to purchase them directly, are awaiting a decision from the U.S. Securities and Exchange Commission (SEC). 

According to the Crypto in America host, the key is understanding that spot ETFs follow a more complex approval process than futures ETFs, or in this case, the ETFs launched by REX-Osprey under Act 40, which explains the delays and the anticipation surrounding this October's deadlines.

Regulatory Differences: Why Spot ETFs Require More Scrutiny

In a post shared on X, Terrett explained that not all ETFs follow the same regulatory path. 

El Teucrium XRP ETF, for example, was registered under the Investment Trust Act of 1940, as it was backed by Treasury bonds and cash, allowing it to operate without the need for active SEC approval. Cryptocurrency spot ETFs, on the other hand, are registered under the Securities Act of 1933 as commodity trusts, requiring the SEC to issue explicit approval before they can begin trading. said. 

According to Terrett, this nuance is crucial. While futures ETFs typically become effective automatically after the statutory period, spot ETFs require approval from the SEC's Division of Corporation Finance. declare the S-1 applications effective. 

Terrett explained that this step cannot be skipped or accelerated without direct regulatory intervention. In his words, "Spot ETFs, unlike futures ETFs, require active SEC approval before they can be launched on the market."

The situation is further complicated by the recent partial shutdown of the U.S. government, which has reduced the SEC's operational capacity. During this period, the agency may pause more routine processes such as reviewing ETF applications. This has begun to generate uncertainty around timelines, although analysts agree that, once the SEC resumes its full activity, Approvals for these exchange-traded funds could come quickly.

October expectations: XRP and Solana in the spotlight

The regulatory calendar marks October as a decisive month for altcoins. According to experts who follow the development of these exchange-traded funds, the SEC has until mid-month to rule on multiple altcoin spot ETF applications. Notable among these are WisdomTree's XRP fund, with a deadline of October 24, and Grayscale's proposals for Solana and Litecoin, scheduled for October 18.

On the other hand, Terrett has clarified that the SEC's recent decision to eliminate the need to file individual Form 19b-4s for each ETF should not be interpreted as a step backwards. On the contrary, it is an attempt to simplify the process through generic listing standardsThis means that, as long as an asset meets the established criteria, approval will depend solely on the review of its S-1. In practice, this could accelerate the launch of several altcoin ETFs almost simultaneously.

However, the journalist also warns that simplification does not eliminate the need for formal approval. Investors hoping that the SEC's silence will equate to automatic approval should remember that, in the case of spot ETFs, a lack of response does not imply compliance and that the agency must make an explicit statement.

The market, meanwhile, remains expectant. XRP has been volatile in recent weeks, with analysts projecting that an eventual approval could attract significant institutional inflows and push its price to new all-time highs. The same is true for Solana, which has gained prominence as one of the leading blockchains for decentralized applications and could benefit from a spot ETF as an entry vehicle for large investors.

The SEC is poised to pave the way for the first altcoin spot ETFs.

Eleanor Terrett's opinion provides clarity in a time of confusion and conflicting expectations. Her explanation of the regulatory differences between futures ETFs, those managed by REX-Osprey, and spot ETFs helps explain why the approval process for spot products like those expected for XRP and Solana isn't immediate. 

Although the SEC has taken important steps toward legal clarity and simplification by adopting generic listing standards for these financial products, final approval remains dependent on active and explicit review.

However, with the October deadlines approaching, the cryptocurrency market is preparing for a potential milestone. If the SEC approves the first altcoin spot ETFs, it would not only open the door to greater institutional legitimacy but also mark a new chapter in the integration of digital assets into traditional financial markets. The imminence of these decisions keeps investors, analysts, and regulators on tenterhooks, aware that the outcome could redefine the relationship between Wall Street and cryptocurrencies beyond Bitcoin and Ethereum.