Hotcoin Research | A Comprehensive Analysis of Popular Crypto Asset ETFs: Who Will Be the First to Obtain the ETF Ticket?

I. Introduction

With Trump's return to the White House and his vow to make America the "Crypto Capital", does this mean that the SEC will give the green light to crypto ETFs? Bitcoin and Ethereum ETFs have already been successfully launched, attracting a large influx of traditional financial capital. Hot candidate assets like SOL, XRP, ADA, and DOGE are eager to try, but who will become the next ETF star? The interweaving of policy relaxation and market uncertainty is making the future of crypto ETFs increasingly murky. This article will delve into the changes in regulation and market trends, and give you insights into the next steps for crypto ETFs!

II. Understanding ETFs and Their Approval Standards

1. What is an ETF?

An ETF (Exchange Traded Fund) is an investment tool that trades on stock exchanges, aiming to track the performance of a specific index, industry, or asset class (such as gold, stock market, or cryptocurrencies). It allows investors to gain exposure to a portfolio of related assets by purchasing ETF shares, without the need to hold each asset directly. This investment approach is similar to a mutual fund, but ETFs can be bought and sold throughout the trading day like stocks, providing higher flexibility.

Crypto ETFs serve as a bridge between the crypto world and the traditional financial market. ETFs can allow investors to easily access cryptocurrencies through traditional securities accounts, without the need to directly hold or manage digital wallets. This not only lowers the investment threshold, but also enhances market liquidity and transparency.

2. The Difference Between Spot ETFs and Futures ETFs

• Spot ETFs: Directly hold the actual underlying assets being tracked. For example, a spot Bitcoin ETF (such as iShares Bitcoin Trust IBIT) holds actual Bitcoins, and its price reflects the spot price of Bitcoin. Spot ETFs provide direct asset exposure, with prices more closely tracking the spot price, making them suitable for long-term holding.

• Futures ETFs: Invest in futures contracts related to the underlying asset, rather than directly holding the asset. For example, a gold futures ETF holds gold futures contracts, and its performance is influenced by the fluctuations in the futures market, which may deviate from the spot price due to contango or backwardation. Futures ETFs provide indirect exposure through derivatives, which can be more attractive to traders seeking to capitalize on short-term price movements.

Futures ETFs primarily impact the market through contracts, while spot ETFs involve the actual buying and selling of assets, and therefore have a more direct influence on cryptocurrency prices, implying a wider source of capital and demand. As a result, the market's expectations for crypto ETFs are more focused on the approval of spot ETFs, as it signifies the regulator's greater confidence in the maturity and completeness of the cryptocurrency spot market, and promotes broader adoption.

3. The SEC's ETF Approval Standards

As the gatekeeper for crypto ETFs, the U.S. SEC has strict approval standards, with a core focus on market manipulation risk, liquidity, and transparency.

• Market Manipulation Risk and Surveillance Sharing Agreements: The SEC has long been concerned about the vulnerability of the crypto spot market to manipulation, as many exchanges are located outside the U.S. or lack regulation. If effective monitoring of abnormal transactions cannot be ensured, ETFs could be used to manipulate market prices. To address this, the SEC requires exchanges to sign surveillance sharing agreements with "significant regulated markets", in order to obtain trading data from the underlying market and promptly detect and prevent manipulation.

• Asset Liquidity: The SEC is concerned about whether the ETF's underlying assets have sufficient market capitalization and trading volume to support the fund's creation and redemption without causing severe volatility. High liquidity means that a single large transaction has a limited impact on market prices, thereby reducing the difficulty of manipulation and tracking error. For example, Bitcoin, as the cryptocurrency with the highest market capitalization, trades around the clock across multiple exchanges globally, with ample liquidity; in contrast, smaller-cap tokens are more susceptible to being controlled by capital and experiencing sharp price swings. Therefore, mainstream coins with high market capitalization and daily trading volume are more likely to meet the SEC's liquidity requirements.

• Transparency and Custody: ETFs require a transparent and reliable pricing mechanism and asset custody solution. In terms of pricing, the regulator prefers to reference a composite index composed of prices from multiple compliant exchanges, to avoid data distortion from a single exchange. For custody, the crypto assets held by the ETF need to be safeguarded by a trusted custodian, using measures such as multi-signature and cold storage to mitigate hacking and loss risks. Overall, the SEC hopes to see applicants submit comprehensive plans for market oversight, fraud prevention, and investor protection, to demonstrate that the launch of the ETF will not harm market fairness and investor interests.

It is worth noting that the SEC's attitude towards crypto ETFs is not static, but rather dynamic, adjusting with changes in the market and regulatory environment. During Gary Gensler's tenure as chairman (2021-2023), the SEC repeatedly rejected spot crypto ETF applications, citing concerns about market manipulation and insufficient investor protection, including at least two Solana ETF proposals. However, after 2024, with changes in regulatory leadership and improvements in market conditions, the SEC began to re-evaluate these standards and gradually accept certain crypto ETF applications, provided that more stringent monitoring measures are in place. In other words, the regulatory standards have never been relaxed, but the SEC's judgment on when those standards are met has evolved.

III. The Approval Process and Performance of Bitcoin and Ethereum ETFs

1. Bitcoin ETFs

Source: https://www.coinglass.com/bitcoin-etf

Bitcoin ETF Approval Timeline:

• Early Attempts (Starting in 2013): The crypto industry began pushing for a Bitcoin ETF as early as 2013, with the Winklevoss Bitcoin Trust submitting the first application, but the SEC rejected it multiple times, citing market manipulation and lack of regulation. Bitcoin futures ETFs were approved in October 2021, while spot ETFs remained elusive for a long time. However, the situation improved in 2023-2024, with multiple asset management giants submitting spot Bitcoin ETF applications, generating significant market interest.

• Key Developments (2023-2024): In 2023, with applications from firms like BlackRock, market expectations intensified. In December 2023, the SEC approved the 19b-4 filings (exchange rule changes) of multiple institutions, a crucial step towards spot Bitcoin ETFs.

• Official Approval (January 2024): On January 10, 2024, the SEC officially approved the S-1 filings (registration statements) of 11 spot Bitcoin ETFs, which began trading on the Nasdaq, NYSE, and other traditional securities exchanges on January 11.

The 11 approved spot Bitcoin ETFs include:

1. BlackRock iShares Bitcoin Trust (IBIT)

2. Grayscale Bitcoin Trust (GBTC)

3. Fidelity Wise Origin Bitcoin Fund (FBTC)

4. ARK 21Shares Bitcoin ETF (ARKB)

5. Bitwise Bitcoin ETF (BITB)

6. Invesco Galaxy Bitcoin ETF (BTCO)

7. Valkyrie Bitcoin Fund (BRRR)

8. Franklin Bitcoin ETF (EZBC)

9. WisdomTree Bitcoin Fund (BTCW)

10. VanEck Bitcoin Trust (HODL)

11. Hashdex Bitcoin ETF (DEFI)

As of March 11, 2025, the total net asset value of the 11 spot Bitcoin ETFs is around $100 billion, down from the high of $125.7 billion on January 31. The top three are: IBIT (BlackRock) with $46.3 billion, FBTC (Fidelity) with $16.2 billion, and GBTC (Grayscale) with $15.8 billion.

Source:https://www.coinglass.com/bitcoin-etf

2. Ethereum ETF

Source:https://www.coinglass.com/eth-etf

Ethereum ETF Approval Timeline:

• Initial Application (from 2023): After progress on the Bitcoin ETF, multiple institutions have started submitting spot Ethereum ETF applications, leveraging the regulatory framework for Bitcoin.

• Key Milestone (May 2024): On May 23, 2024, the SEC approved the 19b-4 filings of multiple exchanges, allowing the launch of spot Ethereum ETFs.

• Final Approval (July 2024): On July 23, 2024, the SEC approved the relevant S-1 filings, officially allowing the listing of spot Ethereum ETFs. The time from 19b-4 approval to S-1 clearance was about 2 months, slightly slower than the Bitcoin ETF, possibly due to the complexity of the Ethereum market (such as staking-related controversies).

• Listing and Trading: The first batch of spot Ethereum ETFs were listed on major US exchanges in late July 2024.

Currently, the SEC has approved 9 spot Ethereum ETFs:

1. Grayscale Ethereum Trust (ETHE)

2. BlackRock iShares Ethereum Trust (ETHA)

3. Fidelity Ethereum Fund (FETH)

4. 21Shares Core Ethereum ETF (CETH)

5. VanEck Ethereum ETF (ETHV)

6. Bitwise Ethereum ETF (ETHW)

7. Invesco Galaxy Ethereum ETF (QETH)

8. Franklin Ethereum ETF (EZET)

9. WisdomTree Ethereum Fund (ETHF)

The total assets under management of Ethereum ETFs are significantly lower than Bitcoin ETFs. As of March 11, 2025, the total AUM of Ethereum ETFs is around $6 billion, with the two largest being Grayscale's ETHE at around $2.5 billion and BlackRock's ETHA at around $2.4 billion.

IV. Potential for Approval of Popular Cryptocurrency ETFs

With the successful approval of spot Bitcoin and Ethereum ETFs, the crypto market's demand for ETFs of other assets has been increasing. As of March 11, 2025, in addition to Bitcoin and Ethereum, multiple cryptocurrencies have submitted ETF applications to the SEC, including Ripple (XRP), Solana (SOL), Litecoin (LTC), Cardano (ADA), Hedera (HBAR), Polkadot (DOT), and Dogecoin (DOGE).

The following is the information on the cryptocurrencies that have currently submitted ETF applications:

1. Ripple (XRP)

The Ripple ETF application was submitted by Bitwise, WisdomTree, Canary Capital, and 21Shares, with the first submission date being October 2024. Ripple has built a network called RippleNet, through which banks and financial institutions can achieve fast and low-cost cross-border transfers, with XRP serving as a bridge currency to provide liquidity. Several major entities, including American Express, SBI, and Siam Commercial Bank, have already tested or will integrate XRP into their cross-border payment solutions. However, the legal dispute between Ripple and the SEC regarding whether XRP is a security may delay the approval. In July 2023, the court partially dismissed the SEC's lawsuit, but the controversy still exists. SEC internal analysts also pointed out that the likelihood of approving the XRP ETF is low before the Ripple case is settled.

2. Solana (SOL)

The Solana ETF application was submitted by VanEck, 21Shares, Canary Capital, Bitwise, and Grayscale, among others. Solana, with its market capitalization and influence, is widely regarded as one of the most promising cryptocurrencies for an ETF after Bitcoin and Ethereum. Solana's meme coin frenzy has attracted a lot of attention, but the meme hype has also led to scams, rug pulls, and bot attacks, raising concerns about its sustainability. The SEC previously classified SOL as a token that may be a security in 2023, and until the SEC clarifies its stance or the industry enacts legislation, the approval of its ETF still faces many uncertainties.

3. Litecoin (LTC)

The Litecoin ETF application was submitted by Canary Capital and Grayscale. The market generally views it as a commodity rather than a security, with a relatively optimistic approval prospect. Litecoin was created in 2011 by former Google engineer Charlie Lee and is a Bitcoin fork with clear commodity attributes. It is known as the "digital silver," and therefore, after the BTC and ETH ETFs, it is "highly likely" to become the next ETF target. Bloomberg predicts a 90% chance of approval and a potential listing in mid-July 2025.

4. Cardano (ADA)

Grayscale submitted the Cardano ETF application in February 2025, and the SEC has now officially accepted it. Cardano is developed by Ethereum co-founder Charles Hoskinson and is a third-generation blockchain platform that emphasizes academic research and security, aiming to advance functionality through peer-reviewed research. The SEC has also previously classified ADA as a security. Cardano's network is often criticized for its slow feature rollout and mocked as a "ghost chain." According to DefiLlama data, as of March 12, Cardano's DeFi ecosystem TVL is only $340 million, ranking 18th.

5. Hedera (HBAR)

On March 12, according to Cointelegraph, the SEC has officially accepted Grayscale's spot Hedera (HBAR) ETF application. Hedera Hashgraph is based on a directed acyclic graph (DAG) structure, claiming to achieve high throughput and low latency. Hedera is governed by a council of well-known enterprises, including Boeing, Google, and IBM, which are collectively responsible for network node operation and decision-making. This governance model gives Hedera both an enterprise-level application positioning and decentralized characteristics. Additionally, HBAR has not yet been classified as a security by the SEC. Some analysts believe that after the successful launch of Bitcoin and Ethereum ETFs, Litecoin and Hedera will be the next wave of ETF targets.

6. Polkadot (DOT)

21Shares and Grayscale respectively submitted Polkadot ETF applications in February 2025. Market interest in it has increased, but approval still requires time and there has been no clear progress yet. Polkadot is a cross-chain blockchain platform initiated by Gavin Wood, the co-founder of Ethereum, aiming to solve the interoperability problem of the blockchain ecosystem, and is hailed as the "internet" of blockchain. DOT was initially issued through an ICO, which caused it to fall into the potential securities category. However, DOT was not named in the SEC's 2023 enforcement list, which may mean that it has not yet become a priority target.

7. DogeCoin (DOGE)

Grayscale and Bitwise submitted DogeCoin ETF applications in early 2025, and the SEC has formally accepted them. This is a very positive signal, as the representative of Meme coins, it shows that the SEC's attitude towards Altcoin ETFs has become more open. The DOGE community is extremely active on social media, often spontaneously organizing charitable and sponsorship activities, which has earned it a positive reputation. Especially since Musk has publicly supported Dogecoin on Twitter multiple times since 2020, its attention and price have repeatedly hit new highs. However, critics point out that DOGE lacks a clear purpose and sustained development, and is overly speculative.

V. Future Outlook: Which Cryptocurrencies Are Most Likely to Get ETF Approval?

Near-term Outlook (2025-2026)

2025 is seen by the industry as the "first year of Altcoin ETFs". With the successful launch of Bitcoin and Ethereum ETFs, regulators are gradually evaluating ETF applications for other crypto assets. Litecoin (LTC) is widely believed to be the most likely to become the first non-Bitcoin/Ethereum ETF to be approved, due to its strong commodity attributes and low risk, and is expected to be approved within 2025. Hedera (HBAR) and Solana (SOL) may follow closely. HBAR has the advantage of not being labeled as a security, and has high corporate recognition, so its approval probability is relatively large. Although Solana has had regulatory shadows, its huge ecosystem and market demand make it a hot candidate, with an estimated approval probability of around 70%. Dogecoin (DOGE) cannot be ignored either, as despite its "grassroots" origins, it has entered the track under the new regulatory mindset, and some analyses even give it a decent 75% probability. However, whether DOGE can pass will also depend on the SEC's tolerance for its market volatility. As for XRP, if the Ripple lawsuit is won or settled in 2025, we may see the SEC quickly approve one to multiple XRP ETF applications to align with market and legal changes. Projects like Cardano (ADA) and Polkadot (DOT) may be slightly lower in the short-term approval order due to past ICO and securities controversies.

Optimistically, by the end of 2025, in addition to BTC and ETH, the market may see 2-3 new crypto asset ETFs (likely to be a combination of LTC, SOL, XRP or HBAR). This will open a compliant door for investors to diversify their crypto asset portfolios.

Long-term Outlook (2027 and beyond)

Looking further into the future (2027 and beyond), crypto currency ETFs are expected to bloom across the board and have a profound impact on the entire financial market.

1. More second-tier crypto assets may enter the ETF ranks. In addition to the aforementioned currencies, other projects with significant ecosystem value (such as Polygon, Avalanche, Cosmos, etc.) may also be included in ETF targets if they can prove their compliance and market maturity. As the industry's regulatory framework is improved, the SEC and other agencies will have clearer classifications of crypto assets, determining which are "commodities" and which are "security tokens". This will clear the legal obstacles for a wider range of assets to issue ETFs. It can be foreseen that by 2027, most of the top 20 cryptocurrencies by market cap are likely to have corresponding ETF products.

2. Innovative ETF strategies will be applied in the crypto field. For example, actively managed crypto ETFs (where fund managers adjust holdings based on market conditions), yield-generating ETFs (holding crypto assets that can be staked and generating returns to investors), and futures and derivatives ETFs (using futures, options to increase or hedge risk) may emerge. The launch of these products depends on the maturity of the derivatives market and regulatory approval. Ideas such as Ethereum staking yield ETFs and Bitcoin options enhanced yield ETFs are already being discussed in the industry. If approved, they will enrich the means for investors to obtain crypto returns, and also mark the entry of crypto asset management into the era of refinement.

3. Global market linkage will be strengthened. In the future, the crypto ETF market will not only unfold in the US, but if regulators in Europe, Asia and other regions follow suit, ETF products approved in the US may be cross-listed in other countries, and vice versa. Compliant ETFs launched in major global financial centers will gradually become an important part of price discovery, and may even influence the pricing power of the spot market. In the long run, as trading volume shifts to compliant channels like ETFs, the past disorder and manipulability of the crypto spot market may be alleviated, and market volatility is expected to decrease, with more efficient and credible price formation.

4. From the investor's perspective, crypto assets will become a regular component of asset allocation. If various types of crypto ETFs continue to emerge, investment advisors and institutional investors can more conveniently incorporate crypto assets into their portfolios to hedge inflation, share in tech growth, or improve the Sharpe ratio. It will also become commonplace for ordinary investors to indirectly hold some crypto asset ETF shares through pension funds and wealth management products. This means that the boundaries between the crypto market and the traditional financial market will become increasingly blurred, and the performance of crypto assets may be more closely linked to macroeconomic and traditional market trends.

VI. Conclusion

As more and more institutions apply for crypto ETFs, Wall Street's interest is growing, indicating that crypto assets are gradually being accepted by the mainstream finance. At the same time, the attitude of the US Securities and Exchange Commission (SEC) towards crypto ETFs has also undergone a transformation - from the initial cautious rejection, to the loosening of approvals around 2024, and then to Trump's promise to implement a series of favorable crypto currency policies in his second term, this marks that crypto currency ETFs may be on the verge of a breakthrough, and the crypto currency market is about to enter a new stage of development.

For ordinary investors, crypto ETFs are a "double-edged sword". On the one hand, it lowers the threshold and operational complexity of investing in crypto, allowing investors who are not proficient in technology to also participate in this emerging field with relatively low risk. Through ETFs, investors do not have to worry about private key loss, exchange security and other issues, holding crypto assets is as simple as holding a stock. This helps investors achieve diversified asset allocation and share the dividends of the blockchain industry growth. On the other hand, the high volatility of the crypto market and policy uncertainties still exist, and the price of ETFs will closely follow the ups and downs of the market. Investors need to do their homework when participating in such products, understanding the characteristics and risk factors of the underlying assets.

In summary, the development of crypto currency ETFs will profoundly impact the crypto investment landscape. At this critical turning point, we are witnessing the change in regulatory attitudes and the landing of the first batch of products. Looking to the future, more diverse crypto ETFs will emerge, bringing digital assets into a broader financial world.

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