Crypto ETFs are entering a maturity phase driven by concrete regulatory decisions from the SEC and the IRS. These actions have reduced uncertainty and opened the door to greater product diversity by accelerating approvals and clarifying operational and tax frameworks. In-kind creation/redemption, enhanced disclosures and a staking tax framework now allow institutional managers to offer yield on digital assets.
The U.S. Securities and Exchange Commission (SEC) has changed the pace of review and authorization of products, approving generic listing standards for spot ETFs and cutting review periods that could previously extend up to 270 days to processes of around 75 days under internal initiatives identified as part of a strategy that speeds up launches.
The approval of the first 11 spot Bitcoin ETFs in January 2024 marked a turning point, and since then the filing of applications for a wider range of assets has accelerated.
An operational milestone was the SEC’s approval, on July 29, 2025, of the use of in-kind creations and redemptions for crypto ETPs; that mechanism allows ETF shares to be exchanged directly for underlying assets such as Bitcoin or Ethereum, affecting transaction costs, efficiency and tax treatment for investors with capital gains.
The regulatory door has opened to ETFs that expand the asset basket, with applications under review for products linked to XRP, Solana, Dogecoin, Litecoin, Cardano and Hedera, and with notices of delay withdrawn for several proposals, as well as authorizations to include altcoins in indexes managed by asset managers such as Hashdex.
Benchmark managers have adapted filings and registration documents to take advantage of these changes, with amendments that include in-kind capabilities and proposals for ETFs on Ethereum and other tokens.
Crypto ETFs: operational changes and approval trajectory
The U.S. Internal Revenue Service (IRS), together with the Treasury, has published guidance that reduces tax obstacles for regulated vehicles participating in staking. In November 2025 Revenue Procedure 2025-31 was issued, which establishes a safe harbor for listed trusts and crypto ETFs to obtain and distribute staking rewards without adverse tax effects at the trust level, provided the activity is passive, transparent and meets fourteen operational requirements, including execution through unrelated third parties.
The same guidance clarifies the tax treatment of staking rewards, stating that rewards are taxed as ordinary income when the investor acquires “dominion and control” over them, and that subsequent gains on disposition will be treated as capital gain.
These reforms combine stricter disclosure requirements on risks, custody and daily portfolio transparency with operational requirements for staking and tax reporting, placing crypto ETFs within regulatory frameworks close to those of traditional funds and ETPs. Compliance with these rules will be a condition for institutional adoption and risk management, including liquidity, leverage and custody.
The SEC’s and IRS’s measures have reduced operational and tax barriers that limited the supply of crypto ETFs, enabling a phase of expansion and product diversification.
