With the cryptocurrency-friendly Trump returning to the White House, Wall Street is ready to launch a new generation of risk products in this $3.2 trillion industry, catering to the tastes of all types of investors, from institutional newcomers to stubborn retail traders.
Some exchange-traded funds (ETFs) that simply track Bitcoin have attracted billions of dollars since the election. Now, with digital asset supporter Donald Trump about to begin his second term as U.S. President, executives and lawyers involved in ETFs say they are strategizing to cater to various tastes. The products they describe include defensive ETFs aimed at professional fund managers curious about cryptocurrency, as well as all-in speculative bets aimed at self-identified degenerate gamblers.
Donald Trump's logo at the Bitcoin 2024 conference in Nashville, Tennessee
Industry investors and lawyers say that high-risk cryptocurrency ETFs may focus on various digital tokens, sometimes using leverage, options, or quantitative strategies. They expect that the U.S. Securities and Exchange Commission (SEC) under Trump will be more accepting of new products than under Biden.
"The SEC may welcome new leadership, and the ETF industry is entering a 'Wild West' era, with new cryptocurrency-linked ETFs and increasingly complex leveraged and inverse products expected to lead the trend," said Aisha Hunt, head of the law firm Kelley Hunt, which often focuses on ETFs.
Several digital asset companies have applied to the SEC to launch ETFs tracking cryptocurrencies like Solana, XRP, and Litecoin. They have little chance of approval under the SEC led by Gary Gensler, but their odds are better under the new administration.
Gary Gensler
Recommended reading: Trump's team is considering creating a new position at the White House to handle cryptocurrency policy.
Chris Newhouse, research director at digital asset risk fund Cumberland Labs, said tokens such as Aave, Uniswap, and Maker are also ready for ETF products.
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