Crypto exchange-traded funds in the U.S. had significant inflows and positive returns in 2025 through August 11, buttressed by a highly favorable regulatory environment. Crypto ETFs took in $29.4 billion in inflows this year as of August 11, and the iShares Bitcoin Trust (IBIT) had a return of 28.1% in that period. This growth has been supported by multiple regulatory actions this year (see Table 1).
Key U.S. Regulatory Developments in 2025 Favorable to Digital Assets
An early confirmation of the second Trump administration’s anticipated pro-crypto stance was the dropping of enforcement action against multiple firms involved in trading cryptocurrencies. In the first two months of the new administration, the Securities and Exchange Commission announced that it was dropping enforcement action against two large crypto platforms, Binance and Coinbase Global Inc. The sector received an additional boost when President Donald Trump issued an executive order establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, which was capitalized with digital assets held by the Department of the Treasury, forfeited as part of criminal or civil asset forfeiture proceedings.
Another important development was the signing of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which establishes a regulatory framework for stablecoins. A stablecoin is a cryptocurrency that aims to maintain a stable value relative to a specified asset, typically a fiat currency like the U.S. dollar. Key elements of the act include:
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Stablecoins are treated as payment instruments, not as securities or commodities.
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They must have 100% reserve backing, with liquid assets like U.S. dollars or short-term Treasuries.
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Issuers must comply with strict marketing rules to protect consumers from deceptive practices.
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Stablecoin holders’ claims get priority over all other creditors in the event of the insolvency of a stablecoin issuer, ensuring a final backstop of consumer protection.
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Stablecoin issuers are subject to the Bank Secrecy Act, obligating them to establish anti-money laundering and sanctions compliance programs.
Crypto ETFs could get another substantial boost if the CLARITY Act becomes law. This proposed law would address issues that currently handicap crypto ETFs, namely the absence of market structure clarity for underlying spot crypto markets. While the stablecoin-focused GENIUS Act provides legislative momentum to the broader crypto ecosystem, it does not directly address ETFs that currently track cryptocurrencies like Bitcoin and Ether. The CLARITY Act would clarify the status of these non-stablecoin cryptocurrencies as either securities or commodities and establish the purview of the SEC and the Commodity Futures Trading Commission in crypto regulation. An important first step was the passing of the CLARITY Act in the House of Representatives with broad support (294-134), as 78 Democrats voted in favor of the measure.
In addition to broad crypto regulations, the ETF industry has benefited from specific regulatory changes by the SEC. When spot crypto ETFs were first launched, ETF shares could only be created and redeemed in cash by authorized participants. On July 29, 2025, the SEC issued a statement confirming that it had voted to approve orders to permit in-kind creations and redemptions by APs for crypto asset exchange-traded product shares. The SEC also approved other measures that support crypto ETF growth, including the approval of options on certain spot bitcoin ETPs and the listing and trading of ETPs that hold mixed spot Bitcoin and Ether.
More broadly, the current SEC does not want to be viewed as a “merit regulator.” The stated intent of its leaders is to focus on providing a regulatory framework rather than opining on the specific merits of individual investment ideas. In practice, this is likely to imply more openness in approving different types of cryptocurrencies and structures if they comply with the regulatory framework laid out by the agency.
Finally, crypto ETFs would also gain tremendous momentum if investors could access them through individual retirement plans. On August 7, 2025, President Trump issued an executive order to democratize access to alternative assets, including digital assets, in defined contribution plans such as 401(k)s. The executive order directs the Secretary of Labor to reexamine the Department of Labor’s past and present guidance regarding a fiduciary’s duties under the Employee Retirement Income Security Act of 1974, with the intention of making alternative assets available to retirement plan participants. The order seems designed to give more legal protection to plan sponsors that offer alternative assets in retirement plans.
Growing Spot and Futures Crypto ETP Ecosystem in the U.S.
As of August 11, 2025, there were 76 spot and futures crypto ETP listings in the U.S., with $156 billion in assets, representing rapid expansion since the first launch in 2021. While Bitcoin dominates, with 59% of the listings and 82% of assets (see Figure 2), there are now products linked to other coins like Solana and Ripple. The ecosystem has expanded beyond spot exposure to include covered call and defined outcome strategies. In this regulatory environment, the range of coins and structures is expected to grow rapidly.
IBIT is positioned to be the biggest beneficiary of regulation-driven growth in crypto ETFs. Regulation will increase institutional adoption, and these firms will likely favor the product with the highest assets, volumes, and options activity. As of August 11, 2025, IBIT was ranked in the top five among all U.S. ETFs by YTD flows, and in the top 20 by net assets. It singlehandedly accounts for almost half of all crypto ETF assets in the U.S.
Historically, crypto ETF returns and flows have been driven by regulation and rates. Regulation is clearly a tailwind in the U.S., particularly with the current SEC leadership in place. The success of the CLARITY Act in Congress will be important to track, since that will provide a market structure framework for the underlying spot market to which crypto ETFs are linked, either directly or indirectly. Interest rates will be another factor, and if the U.S. Federal Reserve cuts rates in September, that would likely encourage investors to stay in a risk-on mode, which should favor crypto ETFs.
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