The U.S. Securities & Exchange Commission approved proposed rule changes for Nasdaq Stock Market LLC, CboeBZX Exchange, Inc., and NYSE Arca, Inc. that allow the exchanges to adopt generic listing standards for certain commodity-based exchange-traded products (ETPs) that physically hold commodities, including digital assets. The approval permits qualifying products to list and commence trading without a separate, product-by-product Commission review and associated public comment process under Rule 19b-4(e), and Commissioner Caroline A. Crenshaw issued a statement arguing this approach reduces investor-protection scrutiny for digital asset ETPs. Crenshaw pointed to the limited operating history of spot digital asset ETPs, noting the first spot digital asset ETP was approved only in 2024 and that the Commission disapproved more than 20 exchange rule filings for spot bitcoin ETPs from 2018 through March 2023. She also said the approval further blurs the distinction between Securities Act of 1933 ETPs and Investment Company Act of 1940 exchange-traded funds (ETFs), highlighting that 1940 Act ETFs have governance, custody, fee, disclosure-review, and examination-related protections that 1933 Act ETP structures do not. The statement also flagged an eligibility feature that can allow an ETP to qualify for generic listing on an initial basis by referencing an already-listed ETF providing at least 40% net asset value exposure to the same commodity, even where the ETF may have become effective automatically. With the exchange rule changes approved, ETPs that meet the generic listing standards can be listed and traded on the exchanges without further Commission approval.

Original source View in tracker