Trump Media Group applies for encryption ETF, the SEC pushes for unified standards to simplify the approval process.

Written by: ChandlerZ, Foresight News

Trump Media & Technology Group recently submitted two S-1 registration statements for cryptocurrency asset ETFs to the U.S. SEC. The group's Truth Social platform is advancing a Bitcoin and Ethereum spot ETF, as well as a composite "crypto blue-chip ETF" composed of five mainstream cryptocurrency assets.

On July 2, according to an announcement from Trump Media & Technology Group, it has submitted an initial registration statement on Form S-1 for a Truth Social Bitcoin and Ethereum ETF to the U.S. Securities and Exchange Commission. This ETF will directly hold Bitcoin and Ethereum, with 75% of the assets invested in Bitcoin and 25% in Ethereum, and will issue shares to investors. The goal of this ETF is to closely track the spot prices of the two crypto assets, taking the form of an open-ended trust, and is intended to be listed on the NYSE.

On July 8, the group submitted another S-1 filing, applying for the "Truth Social Crypto Blue Chip ETF." The assets of the Truth Social Crypto Blue Chip ETF Trust mainly include Bitcoin, Ethereum, Solana (SOL), Ripple (XRP), and Cronos (CRO), held by custodians on behalf of the trust. According to the trust agreement, the trust will allocate its assets to the percentage of portfolio assets (allocation ratio) initially estimated to be about 70% Bitcoin, 15% Ethereum, 8% SOL, 5% CRO, and 2% XRP.

These two applications are in the early stages of the SEC review process, but the assets involved are all mainstream cryptocurrencies with relatively high market values. The market is currently observing whether the SEC will relax its stance on multi-asset crypto ETFs after approving Bitcoin and Ethereum ETFs. The asset distribution proposed by Truth Social is relatively conservative and may have some adaptability in the current regulatory climate.

SEC is brewing a unified listing standard for cryptocurrency ETFs.

At the same time, the U.S. SEC is discussing a universal listing standard for cryptocurrency ETFs with major exchanges. According to The Block, exchanges want a clearly recognized listing framework to avoid the lengthy 19b-4 application process. Under the current mechanism, each cryptocurrency ETF must submit for individual case approval, with a maximum approval period of up to 240 days. Exchanges are pushing for a proposal that would allow ETF products that meet the standard conditions to be listed directly for trading, without needing to submit each one for SEC vote.

Standard discussions involve quantitative indicators such as market capitalization, liquidity, and network distribution. These discussions are still in the early stages, but some within the SEC believe that the mechanism may begin testing before this fall. This move is seen as a way to simplify the application process, shorten listing times, and enhance transparency. Bloomberg analyst James Seyffart stated that once the standards are established, the market will see a wave of concentrated applications for cryptocurrency ETF products, with several currencies including Solana, XRP, and Dogecoin likely to be approved in the short term.

Truth Social's entry point is at this transitional stage. The product declaration does not emphasize technical highlights and does not introduce complex derivative mechanisms. Both ETFs adopt a traditional open-end trust format, similar to the approved Bitcoin spot ETFs. The difference is that the blue-chip ETF includes more cryptocurrencies and involves weight allocation among assets. In the absence of a unified review mechanism, it remains unclear whether this fund can be considered a "qualified product."

The motivations behind political statements and the market environment

After the Trump administration came to power, the frequency of statements regarding crypto assets noticeably increased. In March this year, Trump first stated on Truth Social that "the U.S. cryptocurrency reserves will enhance this key industry, which has been subjected to corrupt attacks by the Biden administration for years. That is why my executive order on digital assets directs the presidential working group to advance a crypto strategic reserve that includes XRP, SOL, and ADA. I will ensure that the U.S. becomes the world's cryptocurrency capital. We are making America great again!"

Subsequently, the executive order signed by Trump disclosed that it would include two parts: strategic reserves and inventory of cryptocurrencies. The strategic reserves will only contain BTC (the digital asset with the largest store of value), using approximately 200,000 tokens held by the government through criminal and civil forfeiture over the years. The other part will consist of a digital asset reserve that includes assets other than Bitcoin, which may include XRP, ADA, ETH, and SOL, as well as potentially other assets. The main difference between reserves and inventory is that the government will not actively seek ways to purchase more inventory assets. The government will only explore using government funds (if they can find a budget-neutral way to do so) to purchase BTC. The Treasury Secretary can determine responsible management strategies, including assets that may be sold from the U.S. digital asset inventory. This has raised concerns about its policy direction.

In May, Politico reported that a post by Trump on Truth Social supporting the inclusion of XRP, SOL, and ADA in the cryptocurrency strategic reserve was actually pushed by a lobbyist, Ballard Partners, and that Trump himself was unaware of it. The related lobbyist has been "expelled" from the White House. According to three insiders, just minutes after the President's post, the White House's "cryptocurrency czar" David Sacks became furious and called Wells to complain. After the post regarding cryptocurrencies went public, Ballard was temporarily excluded from the White House, as staff were instructed not to meet with him. However, five people close to Trump indicated that the dissatisfaction with Ballard goes far beyond this. Some White House officials believe that Ballard is profiting from Trump's reputation, boasting that his ties with the President and Wells are not as close as advertised. The White House declined to comment.

Despite the controversy surrounding the event, Trump has reiterated on multiple occasions that the crypto industry is a key focus for future growth. According to a survey conducted by Deutsche Bank in June, American consumers are the largest user group of cryptocurrencies, primarily consisting of males and young, affluent individuals. In May, the cryptocurrency adoption rate in the U.S. was 17%, higher than 11% in the UK and 10% in the EU. Among young people aged 18-34 in the U.S., the adoption rate of cryptocurrencies rose from 24% in January to 29% in June. Analysts point out that this is mainly due to market optimism about Trump's support for cryptocurrency policies. Among U.S. respondents, wealthy individuals make up 32% of cryptocurrency adopters. Additionally, 23% of American men stated that they use cryptocurrencies for payments or personal investments, while the proportion for women is 13%. Male consumers generally believe they have a deeper understanding of cryptocurrencies compared to women.

Truth Social's submission of the ETF application at this time is difficult to decouple from the political environment. The compliance and business logic of the ETF product still need to be reviewed, but its political symbolic meaning is already present. As a platform and product bearer, Truth Social has room for further commercialization. However, there are also some voices in the market that hold a reserved attitude towards the actual influence of this product. About 30% of the assets in blue-chip ETFs come from tokens other than Bitcoin, and the liquidity and market stability of these assets are relatively limited. Especially for CRO and XRP, their price volatility and regulatory controversies are significant, and there is still disagreement on whether they are suitable as underlying assets for publicly traded funds. The SEC has strict requirements for asset safety, custody arrangements, and valuation mechanisms when reviewing spot ETFs.

Investors are also assessing whether these products can maintain their appeal in the long term. Currently, there are more than 10 Bitcoin spot ETFs trading in the market, most of which are held by asset management giants. Truth Social lacks operational experience in the financial sector, making how to establish market share a real issue. Additionally, operational factors such as fund fees, liquidity support, and market maker cooperation have yet to be clarified, which may also affect its market performance.

The window period between regulatory advancement and market expansion

The US SEC, when considering whether to approve these new ETF products, must respond to political pressures as well as the market's call for more product types. If the unified standards promoted by exchanges are adopted, it could fundamentally change the pathway for ETF listings and open the door for more products. However, until these standards are actually implemented, each new application will still face complex compliance evaluations, and the market cannot rule out the possibility of delays or even denials.

The two ETF applications of Truth Social are still in the processing stage, and it will take a considerable amount of time before the approval results are available. The SEC is currently still reviewing multi-asset ETFs with caution, and it is uncertain whether they can be quickly approved in the short term. However, this round of applications resonates with the upcoming discussions on universal listing standards, and it reflects that crypto ETFs are transitioning from pilot programs to a broader product phase. Once the regulatory path is clarified, market competition will intensify rapidly.