The Golden Age of Crypto ETFs Is Here – Are We Ready For It?

Investing in crypto can be a high-risk/ high-reward proposition.  While some coins have staying power and there’s undoubtedly strong interest in the future development of digital currencies, a great many coins also fail and leave investors broke.  Identifying which investments are sound ones can be complicated for many beginners, as this asset class is still relatively new and rife with technical complexities.

Soon, however, there may be an increased number of simple options out there to help people get their feet wet with crypto investing, even if they don’t understand the ins and outs of how the blockchain works or how to evaluate individual currencies to better understand their earning potential. That’s because the golden age of crypto ETFs may be upon us. 

Attitudes on crypto ETFs are changing on Capitol Hill

Investing in ETFs has long been a favored way for investors to dip their toes into different markets, or even into buying equities in the first place. Exchange-Traded Funds hold different collections of curated assets, giving you an ownership stake in all of the different assets within each ETF’s basket. Some ETFs track the S&P 500 or the stock market as a whole, for example, while others give you exposure to specific niches — like cryptocurrency. 

However, when a new ETF is formed, it has to operate within existing regulations. While the process of creating a crypto ETF isn’t materially different from the process of creating an ETF that provides exposure to more traditional investments like stocks, bonds, or other commodities, regulators have historically been more hostile to crypto ETFs.

However, reports indicate that this is changing under the Trump Administration. 

In fact, Sal Gilbertie, CEO and CIO of Teucrium, told CNBC’s ETF Edge that regulators are becoming “more friendly” under the Trump Administration versus under the Biden Administration. “It’s a completely different environment in Washington right now,” Gilbertie told CNBC. “It’s more welcoming towards innovation — especially in crypto… and that’s a relief for us.” Gilbertie’s fund, Teucrium 2x Long Daily XRP ETF (XXRP), aims to provide double the daily performance of CRP, a cryptocurrency. 

Gilbertie explained that while crypto ETFs still take the same steps that they always did, there is no longer a feeling like regulators are “antagonistic,” or like they are “looking for a problem” or “looking to actually go against whatever it is your trying to do.” 

This increased openness to crypto ETFs is part of a broader trend in the Trump Administration, which has also moved to regulate stablecoins in the GENIUS Act, and which is engaging with leaders in the crypto industry, with the Securities and Exchange Commission (SEC) talking with member firms in the crypto space. 

Are investors ready for crypto ETFs?

Buying an ETF is inherently less risky than purchasing individual coins or investing individually in companies within the crypto space. Any time you spread your money around, there’s less chance of losing it all.

However, the reality is that the asset class itself is still a relatively new and volatile one, and one that it can be hard for beginning investors to dive into. There’s a chance that people will assume ETFs are safer than they are because of their reputation as being lower-risk financial products that are good for novice investors, and that is one risk if a growing number of crypto ETFs are formed and listed thanks to the openness of the Trump Administration.

Still, as long as investors understand that many crypto ETFs will bring significantly greater potential for loss than, say, an ETF that tracks other areas like the healthcare sector or utility companies, there’s nothing wrong with providing more options for putting a portion of portfolio funds into an investment that yes, carries high risk, but that also comes with the potential for greater rewards.