Sandbox

After the SEC enacted two pivotal rulemaking frameworks for crypto products in recent months, signals from chair Paul Atkins, suggest there could be more to come—maybe even before 2025 closes out.

With Generic Listing Standards, and in-kind creation and redemption already under their belts, SEC staffers could yet find several more hefty pieces of policy work in their queues before the year’s done, judging by Atkins’ comments.

Click below, to read a concise summary and assessment of Generic Listing Standards by CF Benchmarks’ Head of Research Gabe Selby, CFA.

Crypto’s Swensen Moment: What Generic Listing Standards Mean for Product Issuers and Allocators - CFB

Crypto’s Swensen Moment: What Generic Listing Standards Mean for Product Issuers and Allocators - CFB

CFBGabriel Selby

The latest piece on the docket arises out of Atkins’ goal of modernizing “securities rules and regulations to enable America’s financial markets to move on-chain”. And the recognition that entities undertaking these innovations have often fallen foul of existing regulations.

Hence the need for an “innovation exemption” (AKA ‘conditional exemptive relief’) to enable a clearer pathway for Web3 firms, DeFi protocols, tokenization models and other “new finance” use-cases, to experiment, and ultimately, to carve out financial innovations, whether fully on-chain, or bridged to TradFi.

Such regulatory flexibility would certainly instigate a shift away from ad-hoc enforcement, and toward more structured, situation-specific rulemaking.

Wen

Atkins has indicated he’d like the rules in place by the end of the year.

The U.S. government shutdown, which ended this week after a record 43 days, may have significantly delayed near-term implementation of the new rules, particularly factoring in any backlog of work resulting from the hiatus.

Either way, below, we outline the probable shape of the rules themselves. Then we sketch out what they could mean – from our perspective as the largest provider of registered benchmarks for institutions creating regulated crypto products.

Toward a Sandbox for Digital Assets

Comments by Paul Atkins in early-October comments signaled that the Commission intends to formalize an innovation-exemption framework by year-end or early 2026, giving Web3, tokenization and DeFi projects a defined on-ramp for compliant experimentation.

The plan echoes global “regulatory sandbox” models. In certain jurisdictions, these permit firms meeting certain criteria, such as those covering transparency, decentralization and investor protection, to operate under conditional relief rather than the full registration burden.

Though Atkins stressed that guardrails for any sandbox the SEC might oversee would be “robust,” for now, details remain fluid. A Notice of Proposed Rulemaking (NPRM) is expected later in the quarter, though as indicated above, timing is uncertain.

Key questions — like what defines “sufficient decentralization,” how exemptions sunset, and whether tokenized-asset platforms are in-scope — remain open.

Key points to know

• Conditional Relief: Firms can operate under exemptive orders if they meet predefined investor-protection and transparency conditions
• Regulatory Sandbox: Time-limited pilots for DeFi, staking and tokenization projects under direct SEC oversight
• ‘Disclosure-Lite’: Simplified filings focusing on code audits, governance and validator policy, rather than full S-1s
• Exit & Transition Rules: Projects must either register fully, or wind down once the test period ends
• Cross-Agency Coordination: SEC working with the CFTC and FinCEN to continue harmonizing definitions for “digital asset” and “digital commodity”
• Investor-Protection Metrics: Mandatory risk dashboards, periodic attestations, and enhanced custody segregation

Implications

If implemented, the innovation exemption (or exemptions) could reshape where and how digital-asset projects domicile.

By lowering procedural risk, the new rules may pull tokenization ventures, staking providers and DeFi aggregators back toward U.S. soil — a reversal of a multi-year off-shoring trend.

For institutional issuers, this could eventually codify the framework required for regulated pilots of listed-fund tokenization, index-linked products, and benchmarked yield vehicles – all without full S-1 registration.

There are of course risks. The main ones voiced are that a loosely drafted ‘exemption’ could undermine investor protections; and/or create uneven competition between “sandboxed” and fully registered firms.

Possible timeline

• Nov 2025: SEC issues Notice of Proposed Rulemaking (NPRM)
• Dec 2025 – Feb 2026: 90-day comment period; joint SEC-CFTC guidance expected mid-window
• H1 2026: Pilot sandbox launches for eligible DeFi/tokenization projects
• Late 2026: Final rule adoption and transition framework for permanent exemptions

Read on for more CF Benchmarks insights and institutional crypto highlights

• A primer for CF Benchmarks' updated Bitcoin Basis Research
• U.S. crypto ETF flows check-in
• Bitwise EU's growing staking ETP franchise

US crypto ETF flows cool, then rebound

October's cross-asset volatility took a toll on the months-long trend of U.S. crypto ETF inflows, though asset gathering looks to have reverted in recent weeks.

After months of near-unbroken inflows, U.S. digital-asset ETFs hit turbulence in October, mirroring a broader stall in Bitcoin’s price momentum and volatility spikes across risk assets.

According to fund-flow trackers, crypto ETPs globally shed roughly $2.6 billion in assets in mid-October, the sharpest weekly outflow since May. Most of that came from U.S. spot-Bitcoin ETFs, which had dominated inflows since summer.

Rebalance (Or retreat)

Quarter-end portfolio rebalancing is a plausible contributor. With Bitcoin oscillating between $110k and $120k, institutional participants look to have trimmed overweight positions built up during the third-quarter surge.

Aggregator data (e.g., TrackInsight, cited by ETF Express here; Farside, and SoSoValue) show that while U.S. vehicles lost $1.9 billion in the week of Oct 14, flows turned positive again by Oct 28 as prices stabilized around the upper end of that band.

Ethereum-linked funds fared similarly: small outflows early in the month, followed by steady inflows into futures-based and staking-themed products once the Treasury yield curve eased and volatility normalized.

Oct to early-Nov summary

Sources: Bloomberg, FactSet (up to 8 Nov 2025.)

Key points

1. ETF demand remains price-elastic, not sentiment-driven. Allocators trimmed risk in sync with volatility, then re-entered as funding rates normalized.
2. Rotation into yield-enhanced and cross-chain exposures continues. Flows into Solana- and staking-themed products offset some Bitcoin outflows.
3. Benchmark depth and transparency—like CF Benchmarks’ reference rates and total-return indices—remain central for ETF issuers managing daily NAV marks and creation/redemption baskets amid choppy markets.

Snapshot

While broader market and macro headwinds will almost certainly continue to buffet risky assets, of which crypto and crypto ETPs are an inescapable subset, for now at least, October’s drawdown can still be categorized as more of a pause than a pivot. With inflows resuming in early November and net YTD subscriptions still above $22 billion, the U.S. crypto-ETF market continues to demonstrate resilience, and growth at scale.

Bitwise EU quietly builds leading staking-ETP franchise

Bitwise's European subsidiary has listed six staking ETPs in nine months, three powered by CF Benchmarks' regulated CF Staking Series methodology

Staking out

For most of 2025, Bitwise Europe (Bitwise EU) has been methodically rolling out a suite of staking exchange-traded products — a niche that has quietly become the firm’s hallmark on the continent. Six listings in nine months have given Bitwise EU one of the most extensive staking-ETP line-ups in Europe, spanning Ethereum, Solana, Avalanche, Aptos, NEAR, and Celestia.

CF Benchmarks is proud to have played a part in this drive as the provider of regulated staking reward indices for some of Bitwise’s EU staking ETPs.

While the European crypto-ETP market remains smaller than the U.S., there’s no doubt Bitwise’s deliberate build-out signals that investor demand for yield-enhanced, on-chain income is material.

With EU and U.S. regulators facilitating the reduction of frictions for issuers of and investors in staking ETPs, we explore how one of those issuers, Bitwise EU, has staked out a leading position in this emerging product class – a position that is set to drive continued adoption by mainstream investors.

Dual-track

Bitwise EU has drawn a clear line between price-only and staking exposures, launching parallel products for several networks. The distinction matters.

• Price-return ETPs serve allocators seeking pure directional exposure.
• Staking-return ETPs target investors comfortable with validator operations, lock-ups, and reward accruals — capturing the full economic yield of PoS networks.

That dual-track approach allows Bitwise EU to meet divergent investor mandates while building operational depth in validator management, yield accounting, and total-return NAV calculation — capabilities that translate directly into its U.S. roadmap.

Below, we list the complete suite of Bitwise EU’s staking ETPs.

Bitwise EU Staking ETPs at a Glance

Blueprint for US expansion

It’s worth noting that although the Bitwise Solana Staking ETF (BSOL) beat a host of rivals to the punch in terms of the first ’33 Act staking ETP in recent weeks, it was in essence foreshadowed by its EU sibling. The European franchise thus acts as a regulatory and operational laboratory, giving the group real-world data on validator performance, slashing risk, and yield variability across multiple chains.

As U.S. policy toward staking within registered funds continues to evolve, Bitwise EU’s accumulated expertise helps position the group to move first when approvals broaden — particularly for funds that combine spot exposure with on-chain yield.

Below, we summarize a new report by CF Benchmarks' Head of Research, Gabe Selby, CFA, and Research Analyst Mark Pilipczuk.

CF Benchmarks Research Primer – Revisiting the Bitcoin Basis

Our research demonstrates that integrating sentiment analysis with momentum strategies can enable traders to harvest the Bitcoin basis in a way that enhances risk-adjusted returns.

The basics of BTC basis

Bitcoin’s futures basis — the spread between futures and spot prices — remains one of the clearest windows into market structure and sentiment. CF Benchmarks’ research team recently revisited this long-running signal in its new study “Revisiting the Bitcoin Basis: How Momentum & Sentiment Impact the Structural Drivers of Basis Activity.”

The paper finds that basis dynamics are evolving fast in the post-ETF era. Once dominated by arbitrage desks and prop-trading firms, the basis now reflects a far broader participant set — including ETF market makers, yield-seeking allocators, and delta-neutral strategies running across CME futures and U.S. spot-Bitcoin ETFs.

Momentum, sentiment and structure

The team analyzed multi-year data across CF Benchmarks’ Bitcoin Reference Rate (BRR) and CME’s perpetual and quarterly futures. Their findings:

• Positive momentum in spot markets consistently amplifies the basis premium as ETF flows rise — a reflection of structural demand for long futures hedges against underlying ETF creations.
• Negative sentiment—proxied by funding-rate compression and option skew—still compresses the basis, but less violently than in prior cycles, indicating greater depth and maturity in arbitrage supply.
• The interplay between ETF liquidity and futures curve shape has become the new equilibrium driver: macro flows, not retail leverage, now dictate the term structure.

CME Group picked up these findings in its own commentary, “Spot ETFs Give Rise to Crypto Basis Trading,” noting that the arrival of physically-backed ETFs has “re-anchored futures pricing closer to fundamentals,” with traditional basis-capture strategies seeing renewed volume.

Key implications

For institutional traders, the basis is once again a primary measure of structural demand, funding conditions, and ETF impact.

For benchmark users, the paper underscores why regulated, manipulation-resistant spot indices—like the CF Bitcoin Reference Rate (BRR)—remain indispensable for calculating fair-value anchors and monitoring cross-market efficiency.

Conclusion
The Bitcoin basis has matured from a cyclical curiosity into a barometer of institutional structure. Its new behaviour tells us that crypto’s derivatives curve is increasingly driven by ETF flows and macro sentiment, not speculative leverage.