Wall Street’s Crypto ETF Crew Is Ready to Roll

It is not clear whom Trump will appoint to replace Gensler, but the choice is widely expected to align with the industry’s interests, especially given Trump’s choices for other roles.

That’s emboldened fund issuers to dream up ways to put increasingly more speculative crypto products into ETFs, like “altcoins,” shorthand for alternatives to Bitcoin.

Several digital asset firms have already applied with the SEC to launch ETFs that would track crypto tokens including Solana, XRP and Litecoin. While they had just a fighting chance of winning approval under the Gensler-led SEC, their odds are better under the new administration.

Tokens like Aave, Uniswap and Maker are also primed for ETF products, said Chris Newhouse, director of research at digital-asset venture fund Cumberland Labs.

Still, using a traditional ETF issuer to access cryptocurrencies doesn’t exactly track with the anti-establishment principles of the original crypto visionaries.

And, if the government takes a more hands-off approach to the nascent edges of decentralized finance, it may not be necessary to put crypto products into an ETF wrapper at all.

While more traditional investors may not ever veer into altcoin territory, there could be more ways they’ll invest in crypto-linked products under the new Trump administration.

“Bitcoin-Plus”

Sui Chung, who runs crypto index provider CF Benchmarks, said his schedule is beyond packed since Trump’s win. Everyone wants to know more about what he calls “Bitcoin-plus” products.

They are based off of the world’s largest cryptocurrency, but generate different returns depending on the components.

“This is part of a trend of mainstream investors seeking to build on their straightforward vanilla exposure through the spot Bitcoin ETF, with additional products to tailor their exposure to the asset class,” he said.

The most popular ones include products that involve commodity futures pegged to crypto that earn yield, as well as those that offer downside protection through options.

While plans for these products have “always been on people’s road maps,” the change in administration has brought it to the fore, Chung said.

John Davi, chief investment officer of Astoria Portfolio Advisors, is considering adding Bitcoin exposure to the ETF model portfolios he runs, if the cryptocurrency pulls back from all time highs.

He anticipates that soon product issuers could offer “smart-beta,” the rules-based investing method investors use to screen stocks based on traits like valuation, or how fast shares have risen, for crypto coins.

“Maybe you have an ETF that would actually give you exposure to other cryptocurrencies besides Bitcoin, and does some type of active management, trend-following approach,” Davi said.

Shiliang Tang, president of crypto principal trading firm Arbelos Markets, also expects tried-and-tested investing strategies to be wrapped into the cryptocurrency ETF package.

“They’re gonna run the Tradfi playbook,” he said, using a portmanteau for the term traditional finance. But, in his view, the underlying strategies will be anything but traditional: “Bitcoin-plus, dominance, leveraged ETFs, altcoin ETFs, basket ETFs” and more, he said.

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