New Crypto ETFs Are Coming. Here’s How Investors Can Prepare

A pair of game-changing decisions is clearing the way for a surge of crypto and other ETFs to hit the market.

Why it matters: The Securities and Exchange Commission recently agreed to fast-track the launch of crypto ETFs. The timeline will shift from a long case-by-case review to standard listing approval. Another Securities and Exchange Commission ruling is giving the fund industry a reason to cheer. Dimensional Fund Advisors can now add an ETF share class to its mutual funds. Many of its 70-plus rivals are also waiting in line to get the greenlight next. What should investors know to prepare for the arrival of these new crypto ETFs and ETF share classes?

Bryan Armour is the director of ETF and passive strategies research for North America at Morningstar Research Services.

12 Questions on Crypto ETFs and ETF Share Classes

1. What was your reaction to the SEC removing these regulatory hurdles?
2. Let’s first start with the rule change regarding crypto ETFs. Can you explain what new investment choices could be available, and what would they track?
3. How soon could firms release new crypto ETFs?
4. They’re already spot crypto ETFs trading. Could new competition push down fees overall?
5. How have crypto ETFs performed so far in 2025?
6. What crypto ETFs do Morningstar consider solid choices for investors?
7. Morningstar considers crypto a speculative or high-risk asset. Will you remind investors why that is?
8. Let’s switch to the SEC’s other recent rule change. It has approved Dimensional Fund Advisors to add an ETF share class to its mutual funds. Can you explain what an ETF share class is and provide a brief history lesson on it?
9. More than 70 asset managers have banded together to get permission to offer dual share class funds. How often does that happen, and why in this case?
10. What do individual investors stand to gain from new ETF share classes?
11. Let’s flip it. What could they lose?
12. What is the takeaway for investors as a new wave of crypto ETFs and ETF share classes arrive?

Key Quote on Crypto ETFs

It’s really in the eye of the beholder what cryptocurrency is interesting to them and what they might want in their portfolio. Once you know which cryptocurrency you want, we look at it as like we would gold ETFs or any other direct asset ETF where there’s a total cost of ownership. You have to consider fees if you’re a long-term investor. That should weigh more heavily in your decision. And then you also have to think about trading costs.

The Takeaway: Examine the underlying strategy before adding exchange-traded funds to your portfolio, says Bryan Armour. They’re just the vehicle. He recommends investors ask themselves a key question: Does the underlying cryptocurrency or ETF share class make sense? Then, let that guide the investing strategy.

More From Morningstar on Crypto ETFs and ETF Share Classes

Funds with new ETF shares classes are expected to trickle out. Dimensional Fund Advisors, who received SEC approval first, would need to overcome some operational challenges, according to Morningstar’s Daniel Sotiroff and Bryan Armour. The firm must receive approval from its funds’ board of directors that new processes are in investors’ best interests to satisfy SEC rules. And investment platforms and service providers will need to create the foundation to support dual share class funds. More than 70 firms are waiting for the SEC to allow them to offer ETF share classes.

Morningstar portfolio strategist Amy Arnott explains how to use bitcoin in a portfolio, including how long to hold the investments. Does your portfolio have hidden cryptocurrency exposure? Check out which popular mutual funds hold big stakes in bitcoin Treasury stocks.

Markets Brief moment: The markets are showing the signs of a potential melt-up. That’s according to Dan Kemp, chief research and investment officer at Morningstar Investment Management Europe, in this week’s Markets Brief. A melt-up happens when investors believe “all news is good news” during a market cycle, and the markets keep going up. Kemp says periods like these can be dangerous for investors because of the temptation to buy at even higher prices and chase the market. That can lead to overcommitment at very high valuations.

In next week’s Markets Brief, Kemp will focus on the arrival of earnings season, when companies shed light on their third-quarter performance and discuss their outlook.

Read Kemp’s perspective on the biggest headlines in the Markets Brief on Morningstar.com on Mondays.

Securities mentioned in this episode:

iShares Bitcoin Trust ETF IBIT

iShares Ethereum Trust ETF ETHA