SEC Pseudo-Outsources Crypto ETF Decisions to CFTC Through Futures Rule

Key Points

1. The SEC's new rule proposal abandons traditional ETF standards like float percentage minimums for crypto products, relying instead on CFTC futures contracts for approval criteria.

2. Bloomberg analyst James Seyffart noted that this move means the CFTC will effectively determine which digital assets can be included in ETFs, as futures contracts become the key requirement.

3. Coinbase Derivatives currently holds a monopoly position in developing the futures history needed for ETF approval, as other crypto exchanges lack ISG membership required for expansion.

4. The SEC's delegation of ETF decision-making to the CFTC may indicate its reluctance to develop crypto-specific expertise while maintaining oversight responsibilities.

5. This arrangement allows the SEC to avoid direct evaluation of digital assets by relying on CFTC determinations for ETF approvals.