Crypto ETF Approvals: Who Approves Them Now

A 72-Hour Window That Rewired the Referee

Over three days at the turn of the US federal fiscal year, the agency that gates American crypto exchange-traded funds did three consequential things in a row. On September 30, 2026, the Securities and Exchange Commission rewrote its own quorum rule. On October 1, it opened the new fiscal year without an approved budget and paused hands-on review of new fund filings. And on October 2, Commissioner Hester Peirce, the agency’s best-known crypto advocate, walked out the door, leaving a Commission of just two sitting members. Then, the same week, that two-person SEC cleared a fresh batch of leveraged crypto funds for listing.

For anyone following crypto ETF approvals, the sequence raises a plain question: with the Commission down to a bare pair, three of five seats empty, and the agency short of cash, who, or what, actually approves a crypto ETF now? The honest answer is that, increasingly, no commissioner does. The US approval machine for spot crypto funds was rebuilt across 2025 and 2026 to run on rules, clocks, and delegated staff authority rather than on a vote of the Commission. That design is exactly why the pipeline barely flinched while the people at the top of it thinned out.

The market, for its part, looked past the drama. Bitcoin traded near $85,900 with a market capitalization around $1.73 trillion on October 6, and the US spot Bitcoin ETFs together held about 1,293,818 BTC worth roughly $110.6 billion, more than 6 percent of all the Bitcoin that will ever exist. The products were built. The question now is institutional, not financial: what happens to approvals when the body that signs them is barely staffed.

Down to Two: What Peirce’s Exit Leaves Behind

Hester Peirce spent eight years as a commissioner and became, to much of the crypto industry, something close to a patron saint; the nickname “Crypto Mom” stuck for a reason. She chaired the agency’s Crypto Task Force, the internal group that turned a decade of enforcement-first posture into a push for written rules. In its farewell statement, dated October 1, the Commission wrote that “long before regulatory clarity became a priority of this Commission, Commissioner Peirce was contending for it,” and praised her for holding fast to her convictions “with integrity and grace.” You can read the official tribute on sec.gov.

Her departure matters less for sentiment than for arithmetic. Caroline Crenshaw, the Commission’s last Democratic member, left in January 2026 when her term lapsed. With Peirce gone, the SEC is down to Chairman Paul Atkins and Commissioner Mark Uyeda, two Republicans, with three of five seats vacant and, as of her exit, no nominee named to fill any of them, as TFTC reported. Summer reporting floated a former SEC official, Steven Levine, as a possible pick, but nothing has been formally sent to the Senate, and confirmations of this kind routinely take the better part of a year. A fully staffed Commission is unlikely before deep into 2027.

This is the same Commission that spent 2025 dismantling the Gensler-era enforcement campaign and redirecting its crypto energy toward rulemaking, a shift we traced in our look at SEC crypto enforcement after the crackdown. The irony is sharp: the agency finally drew clear lines for crypto, then lost most of the people empowered to draw them.

The Quorum Rule the SEC Quietly Rewrote

A regulator with only two members raises an obvious legal worry: can it even act? For the SEC, the answer has long been yes, thanks to a 1995 rule often called the “Rule of Two.” Under 17 CFR 200.41, three members normally form a quorum, but if the number of commissioners in office falls below three, the sitting members constitute a quorum. Two is enough. A Holland and Knight analysis published in July, “Low Tide at the SEC,” noted that the arrangement has been upheld by both the D.C. Circuit Court of Appeals and a federal court in New York, and that a two-member Commission can still handle “enforcement action decisions requiring a Commission vote, settlements requiring Commission approval, rulemaking and other significant policy determinations.” The catch, authors Laura Supple and Allison Kernisky stressed, is that both members must agree, so a single recusal or a split vote can freeze any given matter. The piece is on hklaw.com.

On September 30, days before it dropped to two, the Commission went further and amended that rule. The change, Release 34-106537, lets a single commissioner act as the entire Commission on any matter where every other sitting member is disqualified. The SEC adopted it without a public comment period, classifying it as a housekeeping rule about its own management. Not everyone accepted that framing. James McRitchie, who runs the shareholder-advocacy site CorpGov.net, called it an “underground regulation” and put the objection bluntly: “A quorum is the minimum number of members needed for a body to act. It is plural by definition. One person cannot deliberate with himself.” His critique, “A Commission of One,” is on corpgov.net.

Whatever one makes of the optics, the practical effect is clear. The SEC has arranged its own rules so that the smallest possible number of people can keep the machinery running. For crypto ETFs, though, even that understates how little the Commission itself needs to be involved.

Why the ETF Machine Barely Noticed

Three years ago, every spot crypto ETF needed a formal Commission decision. The SEC spent a decade rejecting Bitcoin ETFs one by one, each denial a document voted out by the commissioners. That world is gone. Between 2024 and 2026 the agency built three separate rails that carry a crypto fund to market without a vote of the Commission, and often without a commissioner touching it at all. Those rails are the whole reason a two-person, cash-strapped SEC is not the catastrophe for crypto ETFs that it might sound like.

The first rail is the generic listing standard, a template approved in September 2025 that lets an exchange list any product meeting fixed criteria without a separate filing for each one. The second is a feature of the Securities Act itself: under Section 8(a), a registration statement becomes effective automatically twenty days after filing unless the SEC steps in to stop it, so a fund can go live on a clock even when no official acts. The third is delegated authority, the standing arrangement under which the SEC’s professional staff, not the commissioners, dispose of routine matters such as exchange rule changes on the Commission’s behalf. Each rail removes the commissioners from a different step. Together they turn approval from a decision into a process that completes itself.

Delegated Authority in Action: the October 2 Approval

The clearest proof that the machine runs without the commissioners arrived on the very day Peirce left. On October 2, the SEC signed off on a Cboe BZX Exchange rule change clearing Volatility Shares to list six triple-leveraged products under the VS Trust, including a 3x Bitcoin fund and a 3x Ether fund, alongside leveraged bets on gold, silver, crude oil and natural gas. Bloomberg senior ETF analyst Eric Balchunas flagged it in real time: “Looks like SEC just approved a 3x Bitcoin ETP as well as 3x Ether, Gold, Silver, Oil, Nat Gas under 33 Act. Wow. Big win for VolatilityShares,” per Yahoo Finance.

Two details make the approval telling. First, it came through delegated authority to the SEC’s Division of Trading and Markets, with no public comments received on Cboe’s August 10 filing. No commissioner cast a vote. Second, leveraged and inverse funds are explicitly excluded from the generic listing standards, so this was a bespoke rule change, the slower path, and it still cleared during a funding lapse at a two-member Commission. The point is uncomfortable for anyone who assumed a thin SEC means a frozen pipeline: the parts of the approval process that never required the commissioners kept moving, even for the riskiest products.

Delegated approvals are not beyond the commissioners’ reach. Any action taken under delegated authority can be called up for review by the full Commission, and the SEC has used that power in the crypto arena before: after staff cleared Nasdaq to list Bitcoin index options in May 2026, the Commission moved to reconsider that approval over the summer following a challenge from CME Group, as CoinDesk reported. With only two members left to invoke or resolve such a review, that backstop now rests on the same two votes as everything else.

A 3x crypto fund is not a conservative instrument. It aims for three times the daily move of an already volatile asset, resets every day, and decays in choppy markets. That such a thing cleared in the same 72 hours the Commission shed a member says less about the product than about the plumbing: approval has become something staff administer, not something commissioners deliberate.

How Approval Went Automatic in the First Place

The autopilot did not appear overnight. It was assembled step by step after the courts forced the SEC’s hand. In August 2023, the D.C. Circuit ruled that the agency had acted arbitrarily in blocking Grayscale’s bid to convert its Bitcoin trust into an ETF while allowing Bitcoin futures funds. That decision cracked the door. In January 2024 the SEC approved eleven spot Bitcoin ETFs at once, with then-Chair Gary Gensler taking pains to say the agency “did not approve or endorse” Bitcoin, only the products, in his statement on the approvals. Spot Ether ETFs followed in July 2024.

Those first approvals were still case by case. The real shift came on September 17, 2025, when the SEC blessed generic listing standards for commodity-based trust shares on the major exchanges, in press release 2025-121. Chairman Atkins framed it as a way to “maximize investor choice and foster innovation,” and Jamie Selway, director of the Division of Trading and Markets, called it “a rational, rules-based approach.” The standards cut a review that once ran up to 240 days down to roughly 75, and they let qualifying products skip the per-fund approval entirely.

Qualifying is the key word. A token clears the template only if it meets one of three tests:

• it trades on a market that belongs to the Intermarket Surveillance Group, a cross-market data-sharing arrangement;
• it underlies a futures contract that has traded for at least six months on a CFTC-regulated exchange; or
• it is already held, at 40 percent of net asset value or more, by an existing US ETF.

The template deliberately excludes leveraged and inverse funds, actively managed strategies, and anything involving staking, lending, or rehypothecation. A companion move in July 2025 let spot crypto ETFs use in-kind creation and redemption, swapping shares for the underlying coins rather than cash, which the SEC authorized in press release 2025-101. Between the court win, the template, and in-kind plumbing, the commissioners wrote themselves out of the routine case.

The Altcoin Wave Now Stuck in the Queue

The template did what templates do: it produced a flood. Once Bitcoin and Ether had their funds, the generic standards opened the gate for a parade of single-asset altcoin products through late 2025, including spot funds for Litecoin, XRP, Solana, Hedera and Dogecoin. Solana funds added staking yield of roughly 6 to 7 percent, a return that behaves nothing like a Bitcoin fund’s and that we unpack in our guide to validator economics and staking yield. By 2026 the live question was not whether an altcoin could get a fund, but whether anyone would buy it.

That is where the funding lapse bites. When the SEC opened fiscal 2026 without a budget on October 1, it paused the hands-on parts of its work: new fund reviews, fresh comment letters, and the staff action needed to declare many registration statements effective, as KuCoin’s news desk summarized. More than ninety crypto ETF applications were outstanding as October began, some with decision windows early in the month. Products already trading, such as BlackRock’s IBIT and Fidelity’s FBTC, were unaffected. New ones waiting on a human at the SEC were not.

Here the rails diverge. A product that qualifies under the generic standards, or whose registration can run out its 20-day clock, can still reach the market; one that needs a staff review or a fresh comment round has to wait. James Seyffart of Bloomberg Intelligence has described the backlog as issuers “throwing a lot of product at the wall,” with well over a hundred filings in the pipeline, per The Block. Nate Geraci of the ETF Store captured the mood more plainly, warning that “ETF Cryptober might be on hold for a bit,” as Decrypt reported. The queue is long, and for now it moves at the speed of whichever rail a given fund can reach.

Commodity or Security: the Question Under Every Approval

The rails only work because the hardest question in crypto regulation was settled before a fund ever reaches them. The generic standards cover “commodity-based trust shares,” which means the whole template assumes the underlying token is a commodity, not a security. Decide that once, in a rule, and every qualifying fund flows through without the commissioners revisiting it. Leave it open, and each product becomes a fight.

Two developments closed the question for the major tokens. In July 2023, Judge Analisa Torres ruled in the SEC’s case against Ripple that the token XRP is “not in and of itself a security,” drawing a line between the asset and the way it had been sold, as Holland and Knight summarized. Then, in March 2026, the SEC and the Commodity Futures Trading Commission issued a joint interpretation sorting crypto assets into categories, treating Bitcoin, Ether, Solana and more than a dozen other large tokens as digital commodities and confirming that staking, mining, wrapping and airdrops are not, on their own, securities transactions.

That taxonomy is the quiet engine under the approval boom. Once a token is a commodity in the eyes of both agencies, a fund holding it fits the template, qualifies for the generic standards, and can be listed by staff without a commissioner weighing in. The classification does the work the commissioners used to do. It also means the fate of a given fund is decided less at the SEC’s front door than in a courtroom or an interpretive release that may predate the filing by years.

What the Two-Person SEC Still Will Not Wave Through

Autopilot has edges. The template serves the settled middle, a commodity token in a plain trust wrapper, and leaves several categories outside it. Anything the agencies still treat as a security does not qualify. Leveraged and inverse funds, as the Volatility Shares approval showed, need a bespoke rule change rather than the template. And a newer class of products, funds tied to event or prediction-market contracts, sits in open territory the SEC flagged in a June 2026 request for comment on “novel” ETFs (file S7-2026-24), whose comment window closed on August 31. Those are the filings most exposed to a thin, distracted Commission, because they are exactly the ones that still need a judgment call.

Stablecoins sit in their own lane entirely. Under the GENIUS Act, signed in July 2025, payment stablecoins are regulated as a distinct category, neither securities nor commodities, which is one reason you do not see a plain “stablecoin ETF” the way you see a Bitcoin one; the economics of minting and backing a dollar token, which we cover in our explainer on how CDP stablecoins work, are a different problem from wrapping a commodity in a trust. Digital collectibles and pure utility tokens, likewise, do not slot into the commodity-trust shape the template is built around.

So the picture is not that everything sails through. It is that the large, liquid, commodity-classified core of the market, the part that drives almost all the assets and flows, now clears on rails, while the contested edges still wait on people. With the Commission down to two and its staff stretched by the funding lapse, the edges wait longer.

Approval Was the Easy Part; Demand Is the Filter

When approval becomes clerical, the real gatekeeper moves to the market. A fund can list in weeks and still gather no assets, and 2026 has been a lesson in that gap. BlackRock’s iShares Bitcoin Trust (IBIT) dominates the category: it holds about 805,222 BTC, roughly $68.9 billion, which is more than the next five US spot Bitcoin ETFs put together. The long tail of altcoin funds, by contrast, has drawn far thinner interest, and leveraged and income products come and go as assets dictate.

Fees tell the same story of a maturing, competitive product. The newest entrants undercut the pioneers, while Grayscale’s original trust still charges a legacy rate many times that of its rivals. The table below shows where the money sits and what it costs, using holdings from bitbo and published expense ratios.

Note what the table does not show: the funds’ flows, which swing far faster than their holdings. A spot ETF can post a heavy inflow one week and a redemption the next without the Bitcoin price moving much, because a creation or redemption is a share-count adjustment handled by market makers, not a market order placed by the issuer. Approval guaranteed these products a shelf. It guaranteed nothing about whether anyone would take them off it, and for most of the altcoin wave, demand, not the SEC, has been the binding constraint.

Crenshaw’s Warning Is Now the Whole Regime

Not everyone cheered the shift to autopilot while it was happening. When the SEC approved the generic listing standards in September 2025, Commissioner Caroline Crenshaw dissented in a statement she titled “Passing the Buck,” arguing the agency was handing off its review responsibility and lowering its guard on products aimed at ordinary investors; her dissent is on sec.gov. At the time it read as a lone objection from the board’s last Democrat. A year later, with Crenshaw and Peirce both gone and the Commission down to two, the structural point she raised has only grown sharper.

The entire approval regime rests on administrative instruments, not a statute: the generic standards, the in-kind order, the March 2026 interpretation, and the staff staking statements can each be rewritten by the same agency that issued them. The one bill that would have locked the framework into law, the CLARITY Act, failed a key Senate vote on September 15, 2026, dying short of the sixty votes it needed, as CoinDesk reported. So the regime stays administrative, and administrative things can be undone administratively.

A two-member Commission does not change what the rails do today; qualifying funds still clear. What it changes is how reversible the whole arrangement is. The same small group that keeps the machine running could, with the same tools, slow it or stop it, and under the amended quorum rule, an even smaller group could act in a pinch. That is the trade in building approval on rules rather than law: it is efficient precisely because it is easy to change, which is also why it is fragile.

What a Thinner SEC Means for Buyers

For someone holding or eyeing a crypto ETF, the near-term practical effects are modest and the structural ones are worth noting. Funds already trading keep trading; a funding lapse and a smaller Commission do not touch an existing listing. New launches, especially for contested products, may arrive later than the filing calendar suggested. And the reversibility that makes the regime nimble cuts both ways: a feature approved by rule can be narrowed by rule, so the menu you see today is not guaranteed to be the menu in two years.

Two things the approval itself never tells you deserve a second look. The first is custody. A large majority of US spot Bitcoin ETF assets sit with a single custodian, which concentrates operational risk no matter how many different tickers you spread across; the cryptographic machinery that underpins institutional custody, and its limits, is the subject of our piece on MPC and trusted execution environments. The second is that an ETF is a convenience wrapper, not ownership of coins you control. You get exposure and a brokerage statement; you do not get keys. Readers weighing that trade-off against holding the asset directly may find our explainer on how smart accounts work a useful counterpoint on what self-custody now looks like.

On tax, the basic shape is unglamorous but important: US spot crypto ETFs are structured as grantor trusts, so for tax purposes you are treated as owning a slice of the underlying coins, and the fund’s routine sales to cover its fee can create small taxable events you never initiated. None of that changes with the Commission’s headcount, but it is the kind of fine print an approval headline skips.

Reversibility is not hypothetical. The in-kind mechanism, the staking carve-outs, and the generic standards themselves were all created by SEC action across 2025 and 2026, which means a future Commission could narrow any of them the same way they were granted. A buyer does not need to expect that to happen; the point is that an ETF feature resting on a staff statement or an interpretive release carries a different durability than one written into law. For long-horizon holders, that is worth weighing alongside fees and custody.

What to Watch Next

Several threads will decide whether October’s thin-SEC moment was a blip or a preview. The first is money: once the agency’s budget is resolved and staff return to full capacity, the paused reviews and comment letters should resume, and the ninety-plus application backlog can start to clear. Watch which products move first, since the ones that qualify under the generic standards or can run out their 20-day clock will not wait for the rest.

The second is people. A nominee for Peirce’s seat, Steven Levine or anyone else, would be the first step toward a Commission that can do more than hold the line, though confirmation would take months. Until then, every contested matter rides on two votes that must agree. The third is rulemaking: the “novel ETF” request for comment that closed on August 31 could mature into a formal proposal, which would be the clearest sign of where the staff want to draw new lines around leverage, event contracts and private-asset funds.

And the fourth is politics. With the CLARITY Act stalled and the midterms ahead, the odds of Congress codifying any of this soon are low, which leaves the approval regime exactly where it has been all year: running on rules the same two people could rewrite. For now, the machine hums along without them. The open question is not whether it can approve a crypto ETF with almost nobody home, it plainly can, but whether a framework that convenient should rest on so few hands.

Frequently Asked Questions

Who approves a crypto ETF in the United States now?

Increasingly, no single commissioner does. Qualifying spot crypto funds reach the market through generic listing standards, automatic 20-day effectiveness under the Securities Act, and delegated authority exercised by SEC staff, so most approvals complete without a vote of the Commission. The commissioners still matter for contested products that fall outside the template.

Can the SEC approve ETFs with only two commissioners?

Yes. Under the SEC’s quorum rule, known as 17 CFR 200.41, when fewer than three commissioners are in office the sitting members form a quorum, so two can act. A September 30, 2026 amendment went further, letting a single commissioner act where the others are disqualified. The practical limit is that both members must agree, so a split vote or a recusal can stall a matter.

Did Hester Peirce leave the SEC, and who replaces her?

Yes. Peirce, who led the SEC’s Crypto Task Force and was nicknamed Crypto Mom, departed at the start of October 2026, leaving Chairman Paul Atkins and Commissioner Mark Uyeda as the only sitting members. No successor has been nominated, and Senate confirmation of a new commissioner typically takes months, so the seat could stay empty well into 2027.

Are new crypto ETFs still launching during the SEC funding lapse?

Some can. Products that qualify under the generic listing standards, or whose registration runs out its automatic 20-day clock, can still reach the market, and on October 2, 2026 the SEC cleared leveraged Volatility Shares crypto funds through delegated staff authority. Funds that need hands-on staff review or a fresh comment round are paused until the agency’s budget is resolved.

Is there a leveraged 3x Bitcoin ETF?

Yes. On October 2, 2026 the SEC approved a Cboe BZX rule change clearing Volatility Shares to list six triple-leveraged funds, including a 3x Bitcoin product and a 3x Ether product. These aim for three times an asset’s daily move, reset daily, and can decay in volatile markets, so they are trading tools rather than long-term holdings.

By Priya Reddy, HOGE Wire regulation desk.