Firms Target Leveraged, Staking, and Single-Asset Funds

In a significant move for the digital asset market, investment firms REX-Osprey and Defiance submitted filings for a combined 27 new cryptocurrency exchange-traded funds (ETFs) in October. The proposed products span a wide range of strategies, including single-asset funds with staking features and highly leveraged instruments.

REX-Osprey filed prospectuses for 21 different funds. This ambitious lineup focuses on single-asset strategies for various altcoins, such as Aave (AAVE), Cardano (ADA), Cosmos (ATOM), and Ethena (ENA), with some of the proposed funds incorporating staking rewards for investors.

Meanwhile, Defiance submitted applications for six leveraged crypto funds. Three of these aim to provide 3x long exposure to Bitcoin, Ethereum, and Solana, while the other three would offer 3x short exposure to the same assets. Bloomberg analyst James Seyffart noted that while regulations typically cap leverage at 2x, issuers may be using options strategies to target the higher 3x leverage.

New SEC Rules Pave the Way for Faster Approvals

This wave of applications follows a key regulatory development from the Securities and Exchange Commission (SEC). On September 17, the agency approved new generic listing standards for crypto-related exchange-traded products on major exchanges like Cboe, Nasdaq, and NYSE Arca. This change is designed to streamline the launch process by removing the need for individual 19b-4 rule change approvals, placing the primary focus on the S-1 registration filing.

According to Bloomberg senior ETF analyst Eric Balchunas, this shift makes future altcoin ETF approvals a matter of when, not if. He suggested that with the old procedural hurdles gone, the path to market now depends mainly on the SEC’s Division of Corporation Finance giving the green light to the S-1 filings.

Government Shutdown Pauses Review Process

Despite the optimistic regulatory outlook, the filings face an immediate delay. A US government shutdown has forced the SEC to operate with limited staff, halting the review and approval of new registration statements. Balchunas described the situation as a “rain delay,” with issuers now queuing up for review once the agency resumes normal operations.

While the shutdown has put these and other filings on hold, the underlying regulatory framework that simplifies ETF approvals remains in place. This suggests that the market could see a rapid succession of new product launches once the temporary pause is lifted.