Canada once led on crypto investment innovation. Back in 2018, Ether Capital was one of the first, if not the first, of what are now known as digital asset treasury companies. Two years later, 3iQ launched the first exchange-traded Bitcoin investment fund, though only after a battle with regulators. In 2021, Purpose, 3iQ and other Canadian ETF providers created the first Bitcoin and Ether ETFs. By 2023, Canadians were pioneering again: 3iQ became the first in North America to introduce staking within a crypto ETF. And earlier this year, Canadian ETF issuers brought Solana and XRP ETFs to market, again among the first anywhere in the world.

For years, Canada innovated while the U.S. stalled. The SEC dug in its heels, blocking spot crypto ETFs while grudgingly allowing only futures-based products. The SEC only relented after a successful legal challenge from Grayscale, opening the door to spot Bitcoin ETFs in early 2024. Spot Ether ETFs followed later that year.

Those Bitcoin and Ether ETFs remain the only spot crypto ETFs listed in the U.S., but that is about to change. In the past, any new crypto ETF in the U.S. had to go through the rule 19b-4 process, a review lasting up to 240 days where exchanges sought approval from the SEC to list a specific ETF product. Crypto ETFs faced additional hurdles, as prior SEC orders had created unique requirements for digital assets. But earlier this month, the SEC approved generic listing standards for “commodity-based trust shares,” which is how most U.S. crypto ETFs are structured.

This change means that if an ETF meets the generic standards, an exchange can list it, skipping the 19b-4 process. The standards also contemplate staking, though some U.S. tax questions still need to be resolved. Importantly, the standards allow spot ETFs for any crypto asset that underlies a futures contract that has traded for at least six months on a CFTC-regulated designated contract market (DCM). That sweeps in a broad set of assets. Coinbase Derivatives, for example, already lists futures on Bitcoin, Ether, Solana, XRP, Cardano, Dogecoin, Polkadot, Litecoin, Avalanche, Shiba Inu, Stellar, and Hedera.

Meanwhile, Canada has been tightening its rules for crypto ETFs. In July 2025, securities regulators amended National Instrument 81-102 to restrict the crypto assets eligible for inclusion in an ETF. Under the new rules, Canadian ETFs may only invest in crypto assets that are listed for trading on, or are the underlying for a derivative that trades on, an exchange recognized by a Canadian securities regulator.

On paper, that looks similar to the new U.S. approach. In practice, it is far narrower: CME and Cboe meet the Canadian recognition requirement, but Coinbase Derivatives and other DCMs with broader crypto futures markets do not. And no Canadian exchange currently offers crypto derivatives at all.

The effect is stark. Canadian issuers are boxed into just four assets — Bitcoin, Ether, Solana, and XRP — because only those assets currently have futures on CME or Cboe. U.S. issuers, by contrast, now have a path to launch ETFs covering nearly any crypto asset with an established futures market.

Canadian investors won’t be fenced in. They can easily access U.S. ETFs through mainstream investment platforms. This disadvantages Canadian issuers, and Canadian demand for U.S. crypto ETFs drives more custody business to U.S. custodians.

The recently adopted Canadian restrictions make little sense. They are stricter than U.S. rules, yet Canadians can freely bypass them by purchasing U.S. ETFs. The fix is straightforward: align Canadian asset eligibility rules for crypto ETFs with the U.S. generic listing standards. That would ensure Canadian investors have access to a broader set of Canadian ETF products, allow Canadian ETF issuers to compete against U.S. products, and give Canadian crypto custodians a larger addressable market.

Canada set the pace on crypto ETFs. The U.S. has caught up and is about to sprint past. Unless Canadian rules change, our early advantage will vanish, shrinking investment options for Canadians and limiting the ability of Canadian ETF issuers and crypto custodians to compete and grow.