The U.S. Securities and Exchange Commission (SEC) has expanded the approval criteria for spot ETFs, previously limited to the Chicago Mercantile Exchange (CME), to include Coinbase derivatives. This means more cryptocurrency ETFs are likely to be approved.
This comes just days after the securities regulatory agency approved spot ETF redemptions, allowing investors to directly exchange tokens with the issuer.
Cryptocurrency ETF, Derivatives-Based Framework... New SEC Standards
According to the new exchange application, the SEC now allows ETFs for cryptocurrencies with futures contracts listed for at least 6 months on Coinbase derivatives or the Chicago Mercantile Exchange (CME).
The new rule allows an issuer's shares to be listed on an exchange if the underlying commodity to which exposure is given has a contract on a Designated Contract Market for at least 6 months. pic.twitter.com/zd5rDdCxPg
— Greg Xethalis (@xethalis) July 30, 2025
Bloomberg ETF analyst Eric Balchunas described this change as "quite a big deal", saying it opens the door for ETFs for about 12 altcoins that already have a high likelihood of approval.
"Coins that have been futures-tracked for over 6 months on Coinbase's derivatives exchange will be approved." – Eric Balchunas, Bloomberg ETF Analyst
According to the ETF analyst, while CME futures are valid, the Coinbase exchange's derivatives market holds more coins than CME.
Accordingly, Balchunas says using Coinbase, including CME, is easier. This development follows the SEC's recent approval of spot Bitcoin and ETH ETFs.
Futures Market Takes Center Stage in ETF Eligibility
This decision is better aligned with traditional financial infrastructure and sets the stage for more complex cryptocurrency products.
However, the path is not simple for meme coins and less established digital assets.
Balchunas emphasized that assets like Bonk, a Solana-based coin, or Trump Coin, lack an active futures market and would require a more complex path through the 1940 Investment Company Act.
"Therefore, it can be seen through a different structure, but historically the 33 Act is preferred because it is purely spot." – Eric Balchunas, Bloomberg ETF Analyst
This structure is more restrictive compared to the 1933 Securities Act (33 Act) that regulates most spot cryptocurrency ETFs. Issuers prefer this structure due to its simplicity.
ETF analyst James Seyfarth claimed that the SEC is outsourcing its decision-making.
He points out that the proposed listing criteria do not mention market capitalization, liquidity standards, or token circulation requirements. This means it is currently focused on futures markets.
"The SEC has outsourced deciding which digital assets will be included in ETFs. The CFTC primarily determines which assets can have futures contracts, and having futures is the main requirement of this rule proposal." – James Seyfarth, ETF Analyst
Until spot cryptocurrency exchanges become members of the Intermarket Surveillance Group (ISG), Coinbase derivatives remain the only "pure cryptocurrency" member, emphasizing its significance.
While the passage conditions have been somewhat relaxed, when ETFs will actually be approved is a slightly different matter. Balchunas estimated that approvals could come in September or October, depending on regulatory feedback and final rule implementation.
