Bloomberg analysts Eric Balchunas and James Seyffart predict a surge in cryptocurrency ETFs by 2025, citing potential SEC leadership changes with pro-crypto advocate Paul Atkins’ nomination. They expect a more favorable environment for ETFs linked to major tokens like Bitcoin, Ethereum, XRP, and others.
Bloomberg Analyst Eric Balchunas Predicted More Cryptocurrency ETFs by 2025. Source: X
Cryptocurrency ETFs are financial products that track the value of one or more digital currencies, allowing investors to gain exposure to crypto without directly purchasing and holding the tokens. These funds are traded on stock exchanges, making them more accessible to traditional investors.
Currently, regulatory hurdles have limited the availability of crypto ETFs in the U.S., with most focusing solely on Bitcoin and Ethereum.
Bitcoin and Ethereum ETFs Will Likely to Dominate The Market
Balchunas and Seyffart predict that Bitcoin and Ethereum combo ETFs will likely lead the way in 2025. These products are seen as more aligned with existing regulatory frameworks, increasing their chances of approval. Companies like Hashdex, Franklin Templeton, and Bitwise are among those expected to introduce Bitcoin and Ethereum ETFs.
These ETFs are considered safer options for approval because Bitcoin and Ethereum have already been classified as commodities rather than securities. This category places them under the oversight of the Commodity Futures Trading Commission (CFTC) rather than the SEC.
On the other hand, the approval for Solana and XRP ETFs is less certain.
Both cryptocurrencies are entangled in legal disputes regarding their classification as securities. XRP’s parent company, Ripple, has been engaged in a lengthy legal battle with the SEC, while Solana faces similar scrutiny. Analysts suggest that any ETF tied to these tokens will likely be delayed until the new SEC leadership clarifies its regulatory status.
Litecoin and HBAR ETFs May Gain Approval
In contrast, Litecoin and HBAR ETFs are viewed as more likely to gain approval. Litecoin’s close association with Bitcoin—a fork of the Bitcoin blockchain—gives it a distinct advantage in regulatory discussions. Similarly, HBAR has avoided classification as a security, so it faces fewer legal problems.
However, the analysts point out that the demand for these ETFs remains uncertain. Only a few issuers have expressed interest in launching Litecoin and HBAR ETFs, which may limit their market impact.
How Change in SEC Leadership May Smooth Cryptocurrency ETFs Approval Process
The U.S. presidential election may lead to a new SEC chair.
The current chair, Gary Gensler, has been even slower in approving ETFs for cryptocurrencies like Ethereum. Under his leadership, the SEC was hesitant to approve spot Bitcoin ETFs. The SEC worried that the price of Bitcoin could be manipulated on unregulated crypto exchanges. Gensler emphasized the need for strong rules to protect investors before approving these products.
In October 2021, the SEC approved the first Bitcoin futures ETF. Unlike spot ETFs, futures ETFs are based on contracts traded on regulated exchanges, which Gensler found safer. However, many investors wanted spot ETFs because they track Bitcoin’s price directly.
In 2024, a federal court ruled that the SEC had no clear reason to block spot Bitcoin ETFs while allowing futures ETFs. Following this ruling, the SEC approved several spot Bitcoin ETFs. Gensler said the agency would follow the law and court decisions, but this change took years.
In mid-2024, Gensler suggested that Ethereum ETFs would take time because the SEC needed to review market risks carefully. Even after approving some crypto ETFs, Gensler warned investors about the risks of cryptocurrencies. He described them as volatile and prone to fraud.
Now, Gensler’s expected replacement, Paul Atkins, supports cryptocurrencies. The analysts believe this leadership change could help altcoin ETFs, including Solana and XRP, gain approval.
