Crypto ETF Approvals Face Setbacks as SEC Slows Progress
The United States financial regulator is taking longer than expected to rule on several cryptocurrency-related investment products, delaying key decisions as it continues to examine a wave of new proposals. The U.S. Securities and Exchange Commission (SEC) has postponed its decisions on applications for exchange-traded funds (ETFs) tied to Ethereum, XRP, and Solana—something analysts in the sector had largely anticipated.
On 20 May, the SEC formally extended its review period for Bitwise’s Ethereum fund, which includes a proposal to allow staking—a process where users earn rewards by helping to validate transactions on the Ethereum network. The regulator now has until early July to come to a conclusion, buying itself an additional 45 days to assess the potential risks and implications of the proposed changes.
Image 1: ETF (Source: Quartz)
Similar delays have affected other crypto ETF applications, including one from Grayscale that focuses on XRP and another Solana-based product also submitted by Bitwise. While some may view these hold-ups as signs of uncertainty, those who closely follow financial markets suggest these types of deferrals are quite normal, particularly for products involving digital assets.
Regulatory Environment Still Evolving
Since the start of 2025, the crypto sector has seen a noticeable increase in optimism surrounding regulation, largely due to changes in the SEC’s leadership. The previous chairperson of the agency, who was known for taking a hard line against the crypto industry, stepped down in January. During his tenure, the regulator had launched over 100 actions against crypto firms, creating a reputation for being sceptical of digital currencies.
With that chapter now closed, the regulatory climate appears to be softening. A number of companies that were previously tied up in legal disputes with the SEC have seen those cases dropped in recent months. This change in tone has encouraged ETF issuers to re-enter the fray, submitting applications for various crypto-related products in the hopes that the new leadership will be more receptive to innovation.
Among these are proposals related to altcoins—cryptocurrencies other than Bitcoin—including Ethereum, Solana, XRP, Polkadot, and Litecoin. The sheer volume of filings has placed pressure on the SEC, which is now working through a packed schedule of upcoming deadlines. Two decisions regarding Polkadot-based ETFs are expected in June, highlighting how much the agency has on its plate.
Analyst Tips Litecoin as Early Contender
Bloomberg ETF analyst James Seyffart has been closely tracking the status of crypto ETF applications and recently shared his views on X. He noted that these delays from the SEC were widely expected, given the volume of new filings and the complexity involved in reviewing each one.
Seyffart believes there’s still some distance to go before any approvals are likely, suggesting that late June or early July would be the absolute earliest for a decision. However, he sees early approvals as more probable in the fourth quarter of the year.
Among the various ETFs under review, Seyffart highlighted Litecoin as one of the more likely candidates to receive approval first. He pointed out that Litecoin, compared to some newer cryptocurrencies, has a more established presence and a less complicated structure, which may work in its favour from a regulatory standpoint.
That said, he also acknowledged that delays are still possible for Litecoin-related applications, just as they are for Ethereum ETF and XRP. The SEC appears determined to carry out a thorough assessment of each proposal before making any commitments.
Image 2: XRP ETF (Source: u.today)
Staking Adds Complexity to Ethereum Bid
One complicating factor in the Ethereum application is its staking component. Since Ethereum shifted to a proof-of-stake model, users can earn rewards by locking up their tokens to support the network. Bitwise’s proposed ETF would allow investors to benefit from this process, but the addition of staking introduces new layers of complexity.
The SEC must now consider how those rewards would be distributed, whether they meet legal standards, and how they might be taxed or disclosed to shareholders. These are not straightforward questions, and the regulator is clearly taking its time to ensure all angles are covered.
Despite these hurdles, enthusiasm in the crypto sector remains high. The approval of spot Bitcoin and Ethereum ETF has provided a sense of momentum, demonstrating that digital asset funds can meet regulatory requirements when structured appropriately. Many in the industry now see this as a stepping stone toward broader acceptance of similar products linked to other cryptocurrencies.
