Memecoin ETF frenzy signals crypto is ‘testing the limits’ of a post-Gensler SEC

A flood of regulatory filings to launch exchange-traded funds tracking volatile, risky memecoins has shocked the crypto industry.

With Gary Gensler gone and a new, crypto-friendly financial watchdog in place, fund issuers are now placing bets on how freewheeling the new administration will be.

“This is a case of issuers testing the limits of what this SEC is going to allow,” James Seyffart, ETF analyst at Bloomberg, said.

“I’m expecting the new crypto task force, led by Hester Peirce, to likely be the lynchpin in determining what’s gonna be allowed versus what isn’t.”

Tuttle Finance, a Connecticut-based fund issuer, went even further — submitting filings for leveraged memecoin funds like BONK, MELANIA, and TRUMP.

During Joe Biden’s administration, Securities and Exchange Commission Chair Gensler led a crackdown on various components of the crypto industry.

He sued some of the industry’s largest firms, including Coinbase, Kraken, and Consensys, over alleged securities violations.

He also held up the approval of the first Bitcoin ETF.

In January 2024, he succumbed (but warned investors to be wary).

And under US President Donald Trump, who made a slew of pro-crypto promises on the campaign trail and launched his own Trump memecoin, the industry has been galvanised.

While it took Bitcoin more than 10 years to get approved, fund issuers are now betting on a crypto-friendly administration approving new ETFs much faster, Kaiko analyst Adam McCarthy told DL News in January.

“The rules of the game have changed,” he said.

Coinbase inspects token listings

There are now dozens of new ETF filings for assets like XRP, Polkadot, Litecoin, and Solana, to name a few.

Industry heads are also changing their stance.

Brian Armstrong, the CEO of Coinbase, said that the crypto exchange’s listing policy needed to be completely overhauled. The company reviews over 1 million new tokens each week, but the process has become tedious and untenable, he aid

“It needs to move from an allow list to a block list, and utilise customer reviews and automated scans of onchain data etc to help customers sift through,” he said.

Liam Kelly is a Berlin-based reporter for DL News. Got a tip? Email him at liam@dlnews.com.