After ETH, will SOL be the next cryptocurrency to get ETF approval?

24-05-24 20:01

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Compiled by Joyce, BlockBeats

Editor's Note:

In the early morning of May 24, the U.S. Securities and Exchange Commission approved the 19b-4 forms of multiple Ethereum spot ETFs, including ETFs from BlackRock, Fidelity and Grayscale. The approval of the Ethereum spot ETF can be seen as the second milestone in the crypto industry after the Bitcoin ETF, reflecting the growing impact of the crypto market on the traditional financial world.

After the approval of the Ethereum spot ETF, Geoffrey Kendrick, head of foreign exchange and digital asset research at Standard Chartered Bank, said that the approval of the Ethereum ETF implies that ETH and similar tokens are not considered securities by the SEC. Given that the core technology in multiple cases is very similar to ETH, it is difficult for the SEC to claim that they are securities, and other cryptocurrency ETFs may be approved in 2025. After Ethereum, which cryptocurrency will be the next to be approved for a spot ETF? There are different voices in the community.

DLnews reported that a CNBC host viewed SOL as the "next cryptocurrency ETF" and summarized the opinions of several crypto community experts on the possibility of SOL ETF passing. UNCHAINED host Laura Shin also organized a discussion on this issue. In addition to SOL, Dogecoin, Litecoin, and XRP are also within the scope of community speculation.

BlockBeats compiled the two reports as follows:

CNBC host Brian Kelly said on the show on Wednesday: "You have to consider that Solana may be next."

Doura Labs CEO Michael Cahill said in an interview: "Technically, the Solana ETF has similar uncollateralized features to the ETH tool under review and should not cause reasonable objections." "Given the activity of market makers, I think the listing rate of SOL ETFs will exceed 75% this year and exceed 95% next year."

Polymarket, a prediction market closely watched by cryptocurrency investors, reported that the Solana spot ETF has a 7% chance of being approved in 2024. The betting pool is also small, with just over $100,000. This suggests that the proposal is not attractive enough for speculators.

ETF Institute co-founder and ETF Store president Nate Geraci is equally pessimistic. At least not until the market sees Solana futures contracts. Long before the spot Bitcoin ETF was approved, Bitcoin futures contracts were approved for trading on the Chicago Mercantile Exchange, one of the world's largest derivatives exchanges. The same is true for Ethereum. Geraci also said that Congress must approve a clear regulatory framework for digital assets in the United States before approving the Solana ETF.

Asymmetry founder, CEO and CIO Joe McCann, who calls himself Solana maxi, believes that Solana is the most likely candidate. "Bitcoin, Ethereum and Solana may be the three giants of this cycle." Joe McCann said that given SOL's position in the market, it must be prepared. He pointed out that despite some regulatory uncertainties, Solana has attracted strong interest from the crypto community and traditional financial fields. Many investors see Solana as a promising alternative, especially for those who missed out on the Ethereum boom.

However, not everyone agrees.

While Bloomberg Intelligence research analyst James Seyffart acknowledged that the “greatest demand” could be seen on SOL, he believes that Dogecoin or Litecoin may be more likely to gain acceptance.

Noting that the SEC has only hinted at considering ETH a security, he tweeted: “Those lawsuits against COIN & Kraken et al say straight out ‘Solana is a security’ lol. That could easily make this a bumpy road.” (Sol was designated a security by the SEC in lawsuits against Coinbase, Kraken and Binance.US.)

Seyffart stressed the importance of a regulated futures market, a key consideration for the U.S. Securities and Exchange Commission (SEC) when approving ETFs. “I don’t think Solana is coming anytime soon,” he said. “Dogecoin or Litecoin, maybe sooner.” He explained that the SEC seeks a liquid and regulated futures market, a standard that Dogecoin and Litecoin may meet before Solana.

The role of futures markets is crucial in this discussion. The Commodity Futures Trading Commission (CFTC) regulates futures markets for Bitcoin and Ethereum, which paved the way for their ETFs. Until a similar market emerges for Solana, its chances of approval remain uncertain. Seyffart wrote in a tweet, "Under the current regulatory framework, I don't think Solana will join the ETF for several years. The earliest may be beyond 2026. But Congress can theoretically speed up this timeline."

Adam Cochran, a core member of the Synthetix team, also believes that LTC and DOGE will be easier to pass because "the road is cleaner (easier)."

Alex Kruger, founder of Asgard, said that both Solana and Dogecoin have potential, depending on the development of their futures contracts, but he admitted that he "does not have a strong opinion."

In addition to this, XRP’s legal status also plays a role. Seyffart also mentioned that the outcome of the ongoing lawsuit against XRP could affect its chances. If XRP is not classified as a security, then it could pave the way for its ETF, provided that there is a regulated market for it.

UNCHAINED reporter Laura Shin believes: “Both sides have valid arguments: LTC and DOGE have little regulatory baggage, but if you look at it without the regulatory drama, it ‘doesn’t make sense’. From a cryptocurrency usage/basics (dare I say ‘first principles’) perspective, SOL ‘makes sense’. 」