Why is the US SEC Delaying Approval for Altcoin ETFs?

The US Securities and Exchange Commission (SEC) chaired by Mark Uyeda has postponed decisions on multiple altcoin exchange-traded funds (ETFs), including proposals for assets like Dogecoin (DOGE), Litecoin (LTC), Solana (SOL), and XRP. 

The delays have raised questions about why the regulator continues to hold back approval for crypto-based financial products, especially as demand for such products grows. Despite the setbacks, experts remain optimistic, with high chances of approval later in the year. In this article, we will delve into the reasons behind the delays and what this means for the future of crypto ETFs.

SEC’s Postponement on Altcoin ETFs

On March 11, 2025, the SEC announced delays for several high-profile crypto ETFs filed by firms like Grayscale, 21Shares, Canary Capital, and Bitwise. These filings included some of the most well-known altcoins in the crypto space, including Dogecoin (DOGE), Litecoin (LTC), and XRP. The decision to postpone was not unexpected. As industry analysts point out, this is part of the standard regulatory process for such applications.

One of the most notable filings that were delayed was Grayscale's proposal for a spot XRP ETF, marking the first time the SEC has acknowledged an XRP ETF application. Despite the setback, the SEC has not dismissed the proposal entirely. Instead, the regulator stated that it would need additional time to analyze the application further. This announcement followed a pattern seen with other major crypto ETF filings in the past.

The SEC also delayed decisions for Solana (SOL) ETFs submitted by VanEck, 21Shares, and Canary Capital. Additionally, 21Shares was among the firms that faced delays for its filing concerning staking in Ethereum (ETH) ETFs.

What's Causing the Delays?

Regulatory delays are not uncommon in the crypto world, especially when it comes to ETFs. The SEC has long been cautious about approving crypto ETFs due to concerns over market manipulation and the lack of clear regulations. The rise in interest for crypto ETFs is undeniable, and many asset managers are eager to tap into this burgeoning market. However, the SEC has been hesitant to approve these products due to fears that the market might be too volatile and prone to fraud.

Bloomberg ETF analyst James Seyffart explains that these delays were expected and are in line with the typical procedures for reviewing such applications. He also noted that the confirmation of Paul Atkins as the new SEC chair, which is still pending, could also contribute to the delays.

However, Seyffart also pointed out that the SEC is moving closer to making decisions on these applications. The agency has set a new deadline for Grayscale's XRP ETF application on May 21, 2025. The final decision on whether the product will be approved or denied may not come until October, giving the SEC more time to evaluate the proposal.

According to Seyffart, the odds of approval for altcoin ETFs this year are still relatively high. In fact, several of the applications are still expected to be approved later in 2025. 

XRP ETFs: A Growing Interest in the Space

One of the most talked-about filings is Grayscale's XRP ETF. As the first spot XRP ETF application acknowledged by the SEC, it has generated significant interest within the crypto community. In addition to Grayscale, several other major firms, including Bitwise and Canary Capital, have filed applications for XRP-based ETFs. Franklin Templeton, another heavyweight in the finance sector, also entered the race with its own XRP ETF application, further increasing the competition.

While the SEC's decision-making process can seem slow, the chances of approval for altcoin ETFs have significantly improved. According to Seyffart, Litecoin (LTC) leads the pack with a 90% chance of approval, followed closely by Dogecoin (DOGE) at 75%. Solana (SOL) and XRP (XRP) are not far behind, with approval chances ranging from 65-70%.

The increased likelihood of approval for these ETFs can be attributed to several factors. First, the approval of Bitcoin ETFs has paved the way for other crypto ETFs to gain regulatory approval. Secondly, as more institutional investors seek exposure to crypto assets, there is growing pressure on the SEC to create regulated investment products that allow traditional investors to enter the market.

Why Are Crypto ETFs Important?

Crypto ETFs are seen as a critical step toward bringing transparency and regulation to the crypto market. These financial products provide investors with a way to gain exposure to digital assets without directly purchasing and holding the underlying assets. For institutional investors, this is an attractive proposition, as it allows them to invest in crypto assets through regulated, traditional financial products.

The SEC’s careful review process is necessary to ensure that these ETFs meet the standards of transparency, security, and market integrity. The regulator’s goal is to prevent market manipulation, fraud, and excessive volatility, which could harm retail and institutional investors alike.