Crypto ETFs Soar as Industry Eyes a New Era Under Trump
What a difference a year makes. Back in early January 2024, the asset-management sector was cautiously observing whether the anticipated launch of U.S. spot bitcoin exchange-traded funds (ETFs) would deliver on expectations, potentially attracting as much as $30 billion in their inaugural year. Now, those same issuers are celebrating.
That initial wave of bitcoin ETFs amassed a staggering $65 billion in 2024, contributing to a surge in bitcoin’s price from $43,000 to over $100,000. BlackRock’s iShares Bitcoin Trust (IBIT), the largest of the new offerings, has become the most successful debut in the ETF industry’s 35-year history.
And for many in the cryptocurrency world, this is just the beginning. Shortly after the first anniversary of these products on January 10, President-elect Donald Trump – who has pledged to be a “crypto president” – will be sworn in for a second term. This has fueled excitement among cryptocurrency enthusiasts, who anticipate a new boom period for digital assets.
Applications for novel crypto products are already flooding regulators’ inboxes.
“Everyone is now aware of how much money there is to be made, and with a new, more friendly administration, there’s no reason not to go ahead and file your best ideas with regulators,” said Joe McCann, founder and CEO of the digital assets hedge fund Asymmetric, based in Miami.
While Gary Gensler, the crypto-skeptic Securities and Exchange Commission (SEC) chair under the Biden administration, was compelled to approve the first spot bitcoin ETFs – and similar ethereum products – after losing a court challenge, he continued to caution that cryptocurrencies are highly volatile and susceptible to scams and manipulation. Paul Atkins, Trump’s appointee to succeed Gensler, is widely viewed as a supporter of digital assets.
As of late November, companies including VanEck, 21Shares, and Canary Capital had responded to expectations of a more crypto-favorable stance in Washington by submitting at least 16 applications to introduce exchange-traded products that would track crypto indices or digital tokens such as Solana and Ripple’s XRP, according to SEC filings and industry sources.
Lighter Regulation Expected
The push to launch the next wave of crypto products gained momentum weeks before the election, with many in the industry forecasting a more relaxed regulatory approach, regardless of whether Trump or his rival, Vice President Kamala Harris, won.
“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 hopes to launch a Solana ETF in 2025.
In addition to XRP and Solana, which are the fourth- and sixth-largest coins by market capitalization, respectively, according to CoinGecko, Canary has filed to launch products linked to Litecoin and HBAR, less widely held coins, according to SEC filings.
“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 subsequently established the new crypto asset manager Canary Capital in October. “Now, it’s off to the races,” he added.
However, the impending crypto ETF gold rush encompasses more than just products tied to single coins. New derivative products are poised to debut within days of Trump’s inauguration, and innovative multi-asset or hybrid products are also in development.
Several issuers, including Calamos Investments, Innovator ETFs, and First Trust, have filed for new funds that would utilize recently-introduced bitcoin ETF options to protect investors from potential bitcoin losses. The first of these products are expected to launch on January 22, according to issuers.
The SEC approved options on some of the bitcoin ETFs late last year, including BlackRock’s iShares Bitcoin Trust, and granted CBOE Global Markets the go-ahead to launch options tied to the Cboe Bitcoin U.S. ETF Index, paving the path for this new series of ETFs.
Federico Brokate, head of U.S. business for the digital asset manager 21Shares, which has launched U.S. bitcoin and ethereum ETFs, in addition to a broader range of offerings in Europe, suggested that the new product landscape could also include listed funds tied to baskets of cryptocurrencies or that track a combination of alternative assets like bitcoin and gold.
“Product innovation in the U.S. is just getting started,” he stated.
To be sure, these novel products remain a gamble. While bitcoin ETFs have performed well, those launched in July linked to ether, the world’s second-largest token, have attracted relatively modest inflows of $12.8 billion, according to Paris-based TrackInsight. Furthermore, while the price of bitcoin more than doubled in 2024, ether lagged, gaining 53%.
Because less widely-held coins are still in their early stages, the factors that drive returns and volatility aren’t always clear, said Todd Sohn, ETF analyst at the broker-dealer Strategas.
While trading in bitcoin and ethereum futures and futures-based ETFs has existed for several years in the U.S., these are currently the only coins for which a futures market is available. Sohn noted that the presence of futures trading has given regulators confidence in the breadth and depth of both bitcoin and ether.
It also remains to be seen how quickly Atkins will embrace the most innovative of the proposed products, considering not only potential risks but also the ongoing debate on whether these tokens are securities that fall within the SEC’s jurisdiction.
Nevertheless, that regulatory uncertainty isn’t dampening the enthusiasm of the crypto asset-management sector.
“The only limit on what products emerge will be human creativity,” said VanEck’s Sigel.
