SEC Seeks Comment on NYSE Proposal for 85% NAV in Crypto ETF Assets Including XRP

The U.S. Securities and Exchange Commission (SEC) is seeking comments on the New York Stock Exchange’s (NYSE) proposed rule change for crypto ETFs. The Exchange is seeking to amend the generic listing standards, proposing that these crypto funds should hold 85% of their net asset value (NAV) in assets eligible under the listing standards, such as Bitcoin, Ethereum, and XRP.

SEC Seeks Comments On NYSE’s Proposal For Eligible Assets Like XRP

In a release, the SEC announced that it is soliciting comments on the NYSE’s proposed rule change to modify the generic listing standards for crypto ETFs. The Exchange is proposing to amend a rule requiring crypto ETFs to hold at least 85% of their NAV in assets already permitted under the generic listing standards.

It is worth noting that the SEC approved last year the generic listing standards proposed by the NYSE and other exchanges, enabling them to list crypto ETFs for eligible assets such as BTC, ETH, and XRP more quickly. The SEC also confirmed the status of these eligible assets this year by classifying them as commodities under the Token Taxonomy guidance, which it issued jointly with the CFTC.

Under the NYSE’s proposed 85/15 framework, these crypto ETFs will hold 85% of their NAV in these commodities, commodity-based assets, eligible securities, and cash and cash equivalents. Meanwhile, the remaining 15% of the Trust’s holdings can be in commodities, commodity-based assets, or securities that do not meet the requirements of the generic listing standards.

The NYSE noted that this proposal is consistent with the thresholds that the SEC recently approved for similar commodity-based ETFs. The Exchange has also designed eligibility criteria to help monitor trading in such shares, thereby mitigating fraud and manipulation risks, especially given that eligible assets such as XRP have large markets.

The Second Part Of The Proposal

The NYSE is proposing to amend the definition of “commodity” under the generic listing standards by excluding non-fungible assets and collectibles from that definition. Under the SEC’s Token Taxonomy guidance, the commission classified digital collectibles, payment stablecoins, and crypto tools as commodities, alongside crypto tokens such as BTC, ETH, and XRP.

The Exchange stated that this proposed rule change is intended to exclude those assets from the definition of eligible commodities under the generic listing standards. However, this would not preclude the Exchange from submitting a separate rule change proposing the listing and trading of crypto ETFs that include such assets.

This could be key, especially given that Canary has filed for the PENGU ETF, which also plans to hold Pudgy Penguin NFTs alongside PENGU tokens. However, Canary is planning to list the crypto ETF on the Cboe BZX Exchange.