SEC Spot ETF Approval Process for Blockchain Products

The 19b-4 Filing Process for Blockchain-Based ETFs

The Securities Exchange Act Section 19(b)(4) filing process governs all proposed rule changes by national securities exchanges, including proposals to list new ETF products. For blockchain-based ETF products, this process has become the critical regulatory gateway that determines market access. Between January 2024 and March 2026, the SEC has processed 19 spot crypto ETF approvals — 11 Bitcoin (approved January 10, 2024) and 8 Ethereum (listing approved May 23, 2024, trading launched July 2024) — each requiring listing exchanges to satisfy enhanced surveillance and operational requirements. The broader crypto ETP pipeline has expanded dramatically: 155 total filings covering 35 different tokens have been submitted since 2024, with Solana ETF filings from 7 issuers (Fidelity, 21Shares, Franklin Templeton, Grayscale, Bitwise, Canary Capital, and VanEck) carrying estimated 75-90% approval probability. The regulatory environment has shifted significantly with the transition from SEC Chair Gary Gensler (skeptical) to Paul Atkins (crypto-friendly), and the signing of the GENIUS Act on July 18, 2025, establishing payment stablecoin guardrails.

Surveillance Sharing Agreement Requirements

The SEC’s historical rejection basis for spot crypto ETFs centered on Exchange Act Section 6(b)(5), which requires exchange rules to prevent fraud and manipulation. The Commission’s standard requires a “comprehensive surveillance sharing agreement” with a “regulated market of significant size” related to the underlying asset.

For spot Bitcoin ETFs, this requirement was satisfied through agreements between listing exchanges and the CME Group. The CME Bitcoin futures market, with average daily volume of $5-7 billion and open interest exceeding $8 billion, constituted the regulated market of significant size. The correlation analysis between CME Bitcoin futures and spot Bitcoin prices — demonstrating a lead-lag relationship that enables futures surveillance to detect spot market manipulation — was the evidentiary breakthrough that enabled approval.

The same framework applied to Ethereum ETF approvals, using CME Ethereum futures as the surveillance market. For future tokenized ETF products — whether holding traditional assets in tokenized form or blockchain-native assets — the surveillance requirement will need to be satisfied on a product-by-product basis.

Filing Timeline and Review Process

The 19b-4 process follows a statutory timeline. After a listing exchange files a proposed rule change, the SEC publishes the filing for public comment, then has 45 days to approve, disapprove, or institute proceedings. If proceedings are instituted, the Commission has up to 240 days from filing to issue a final determination.

For spot Bitcoin ETFs, the review process extended through multiple delay cycles. Grayscale’s initial filing was first submitted in 2016 and approved only in January 2024, following the D.C. Circuit’s August 2023 ruling in Grayscale Investments, LLC v. SEC that the Commission’s prior rejections were “arbitrary and capricious.” This judicial intervention — finding that the SEC had approved Bitcoin futures ETFs while denying spot Bitcoin ETFs without adequate explanation — forced the Commission’s hand.

Tokenized ETF filings will navigate the same process, though without the decade-long precedent of rejection that characterized Bitcoin ETF applications. The comparison of approval timelines across jurisdictions shows that the US process, while thorough, is among the slowest globally.

Listing Standards for Tokenized Products

NYSE Arca, Nasdaq, and Cboe BZX have each developed listing standards for crypto-related ETPs. These standards address:

• Net asset value calculation: Requirements for independent pricing sources, calculation frequency, and publication timing
• Custody: Minimum custodial standards exceeding those for traditional ETFs
• Market making: Obligations for designated market makers to maintain continuous quotes
• Circuit breakers: Trading halt procedures triggered by NAV deviation thresholds

For tokenized ETFs, listing exchanges may need to develop additional standards addressing on-chain settlement, smart contract audit requirements, and blockchain-specific operational risks. The exchanges’ listing standards evolve through the same 19b-4 process, creating a layered regulatory approval pathway.

Current Filing Pipeline

As of March 2026, listing exchanges have filed 19b-4 applications for spot ETFs covering Solana (7 filers with staking included, filed June 13, 2025), XRP, Litecoin, and several multi-asset crypto baskets. Assets under review span 20+ different tokens including high-probability approvals (Solana, XRP, Litecoin), medium-probability candidates (Cardano, Polkadot, Chainlink), and speculative filings including meme token ETFs (DOGE, TRUMP, BONK, PENGU). Ethereum ETF staking has also been proposed, with Grayscale filing the first staking request on February 14, 2025, for both the Grayscale Ethereum Trust ETF and the Grayscale Ethereum Mini Trust ETF. The SEC’s response to these filings will establish whether the surveillance sharing framework approved for Bitcoin and Ethereum extends to additional crypto assets with different market structures.

Simultaneously, fund sponsors have submitted preliminary discussions with SEC staff regarding fully tokenized ETF structures — where the fund shares themselves are blockchain tokens. These discussions, conducted through the Division of Investment Management rather than the Division of Trading and Markets, address 40 Act compliance rather than exchange listing requirements.

Implications for Market Structure

The 19b-4 approval process shapes market structure by determining which products can access national securities exchange listing. Products that cannot satisfy surveillance requirements may be relegated to alternative trading systems (ATS) or over-the-counter markets, significantly limiting their investor access and liquidity.

For the tokenized ETF ecosystem, the 19b-4 process creates a regulatory funnel that will determine the pace of product launches. Fund sponsors must coordinate with listing exchanges on filing strategy, timing, and the assembly of surveillance and operational evidence that the SEC requires.

The guide to regulatory filing for tokenized ETFs provides detailed navigation of the 19b-4 process for fund sponsors and listing exchanges developing tokenized ETF products.

Exchange Listing Standards for Tokenized Fund Products

Each national securities exchange maintains listing standards specific to ETF products, with incremental requirements for blockchain-based products:

NYSE Arca: Rule 8.201-E governs Commodity-Based Trust Shares; Rule 5.2-E(j)(6) covers Trust Issued Receipts. For tokenized ETFs, NYSE Arca would likely develop a new rule category (or amend existing rules through the 19b-4 process) covering: smart contract audit verification requirements; blockchain platform reliability standards; oracle network requirements for on-chain NAV; and minimum authorized participant commitments for tokenized creation/redemption.

Nasdaq: Nasdaq’s listing rules for ETPs (Rule 5735 for Managed Fund Shares, Rule 5711 for Commodity-Based Trust Shares) would require similar amendments. Nasdaq’s Digital Assets unit, launched in 2023, provides technology infrastructure that could support tokenized ETF listing — including custody, execution, and settlement services through Nasdaq’s institutional framework.

Cboe BZX: Cboe’s BZX Exchange filed the first successful 19b-4 for a spot Bitcoin ETF (the ARK 21Shares Bitcoin ETF) and has been the most active exchange in filing crypto-related 19b-4 proposals. Cboe’s experience navigating the crypto ETF approval process positions it as a likely early filer for fully tokenized ETF listing rules.

The Grayscale Judicial Precedent

The D.C. Circuit’s August 2023 decision in Grayscale Investments, LLC v. SEC (No. 22-1142) fundamentally altered the SEC’s approach to crypto ETF approvals. The court held that the SEC’s approval of Bitcoin futures ETFs while denying spot Bitcoin ETFs was “arbitrary and capricious” because:

• The SEC failed to explain why the fraud and manipulation concerns applicable to spot Bitcoin markets did not equally apply to Bitcoin futures markets (which derive their prices from the same spot markets)
• The correlation between CME Bitcoin futures prices and spot Bitcoin prices was sufficient to demonstrate that CME surveillance sharing agreements could detect manipulation in spot markets

This judicial precedent establishes that the SEC cannot maintain inconsistent treatment of functionally equivalent products — a principle that could benefit tokenized ETF applications. If the SEC approves traditional ETFs while denying equivalent tokenized versions, the Grayscale rationale would require the Commission to articulate a specific basis for differential treatment.

Parallel Filing Requirements for Tokenized ETFs

Tokenized ETF launches require parallel regulatory filings across multiple SEC divisions:

Division of Investment Management: N-1A registration statement (for open-end funds) or N-2 registration statement (for closed-end funds) covering the fund’s investment objective, strategies, risks, and operational structure. For tokenized ETFs, the N-1A must include: blockchain technology risk factors; smart contract operational descriptions; custody arrangements for both underlying assets and tokenized shares; and transfer agent blockchain integration descriptions.

Division of Trading and Markets: 19b-4 filing by the listing exchange, as described above, plus Form ATS filings if the fund’s tokenized shares will trade on alternative trading systems. FINRA review of broker-dealer participants in the fund’s distribution chain.

Division of Corporation Finance: If the tokenized fund involves novel securities structures (such as tokenized creation units that differ from traditional ETF shares), the Division of Corporation Finance may have interpretive authority over the securities registration aspects.

OCIE/Division of Examinations: Post-launch examination authority, with examination priorities likely to focus on custody controls, smart contract operations, and compliance monitoring.

International Listing Considerations

Tokenized ETF products may seek listing on non-US exchanges, either as primary listings or cross-listings:

European exchange listings: Tokenized fund shares listed on EU exchanges require compliance with both the exchange’s listing rules and the DLT Pilot Regime (if the exchange operates as a DLT MTF). ESMA’s technical standards for DLT market infrastructure provide the regulatory framework for European listings.

Hong Kong exchange listings: The SFC’s tokenized fund authorization framework applies to products listed on HKEX, with specific requirements for smart contract standards, custody, and investor protection.

Swiss exchange listings: SIX Digital Exchange (SDX) provides a fully regulated DLT exchange and CSD for tokenized securities, including fund shares. FINMA’s DLT Trading Facility category provides the regulatory basis for SDX listings.

SEC Staff Engagement on Tokenized ETF Structures

Beyond the 19b-4 process for exchange listing, the SEC’s Division of Investment Management has engaged with fund sponsors on the substantive 40 Act questions that tokenized ETF structures present. These discussions — conducted through pre-filing conferences, no-action letter requests, and informal staff guidance — address issues that the 19b-4 process does not reach:

Smart contract as fund infrastructure: Staff discussions have explored whether the fund’s smart contract constitutes a “material service provider” requiring board oversight under Section 15(c) of the Investment Company Act. If smart contract operators are classified as material service providers, the fund board must evaluate and annually renew the smart contract services agreement — creating governance obligations for blockchain infrastructure that traditional ETFs do not face.

On-chain NAV publication: The Division has considered whether publishing NAV on a blockchain satisfies the Rule 22c-1 requirement for daily forward pricing. Staff have indicated informally that on-chain NAV publication is acceptable provided the NAV is calculated using the same methodology and pricing sources required for traditional ETFs, and the on-chain publication timestamp is verifiable and consistent with the fund’s stated pricing time.

Tokenized basket delivery: For ETFs using in-kind creation and redemption, the delivery of tokenized basket securities raises questions about whether the basket components satisfy the “securities” definition under Section 2(a)(36) of the 1933 Act. Tokenized versions of US Treasuries, corporate bonds, or equity securities must be legally recognized as the same securities as their non-tokenized counterparts for in-kind treatment to apply.

These staff-level discussions have not produced published guidance, but they establish an informal framework that fund sponsors use to structure tokenized ETF products for eventual 40 Act registration.

Post-Approval Compliance and Ongoing Reporting

Approved tokenized ETF products face ongoing compliance obligations beyond initial listing:

Form N-PORT (monthly): Detailed portfolio holdings reporting, including: security-level positions with tokenized asset identifiers; NAV calculation methodology disclosure; and liquidity classifications for tokenized positions. On-chain data sources can automate significant portions of N-PORT preparation.

Form N-CEN (annual): Census reporting covering fund service providers, distribution channels, and operational characteristics. Tokenized ETFs must report blockchain-specific service providers (smart contract auditors, oracle providers, blockchain node operators) alongside traditional fund service providers.

Shareholder reports: Annual and semi-annual reports to shareholders, incorporating blockchain-specific operational updates, smart contract audit summaries, and technology risk assessments.

Exchange ongoing reporting: Listing exchanges require ongoing compliance with listing standards, including: quarterly certification of custody arrangements; annual smart contract audit submissions; and notification of material changes to blockchain operations.

The SEC enforcement analysis covers how post-approval compliance failures could trigger enforcement actions. The Investment Company Act analysis examines the 40 Act compliance framework for approved tokenized fund products. The CFTC-SEC jurisdiction analysis covers how dual-agency oversight affects the approval process for products holding CFTC-classified commodities. Compliance program examination: The Division of Examinations reviews the fund sponsor’s and listing exchange’s compliance programs for ongoing adherence to approval conditions. For tokenized ETF products, compliance program reviews would encompass smart contract governance, blockchain infrastructure monitoring, and digital asset custody verification — expanding the traditional examination scope to technology-specific operational controls.

The institutional investor guide examines how the approval process status of different tokenized fund products affects institutional allocation decisions. The SEC publishes ETF approval orders at sec.gov.

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