Industry insiders are already looking ahead; the much awaited approval of a spot exchange-traded fund (ETF) for Ethereum in the US is almost here. Rising as a possible leader for the next cryptocurrency ETF is Solana, a fast blockchain network.
Founder and CEO of BKCM LLC Brian Kelly thinks Solana is a viable candidate for an ETF because of its rising popularity and possibility to be part of a “big three” with Bitcoin and Ethereum in the present crypto market cycle.
This attitude fits the current increase in expectation about Ethereum ETFs. The last-minute approval of Bitcoin futures ETFs in January clearly shows the Securities and Exchange Commission’s (SEC) recent change in posture, which has generated hope for Ethereum and maybe other cryptocurrencies.
CNBC Guest believes $Sol will have the Next Spot ETF 🤯 pic.twitter.com/M79fSC6uJy
— Joshua Jake (@itzjoshuajake) May 22, 2024
Investor Interest: A Mixed Bag
However, not everyone in the industry agreed with Kelly’s forecast.
According to Nate Geraci, president of The ETF Store, a spot Solana ETF won’t be available until Congress establishes a legal framework governing cryptocurrencies or until a Solana futures product traded on the Chicago Mercantile Exchange is listed.
No sol ETF until either CME-traded sol futures exist or Congress puts legit crypto regulatory framework in place…
Crypto ETF spigot turned off for a while after spot eth ETF approval… IMO. https://t.co/6CwP8UcOj4
— Nate Geraci (@NateGeraci) May 22, 2024
As of right now, the United States has only authorized futures for Bitcoin (BTC) and Ether (ETH).
For his part, analyst Robert Mitchnick of Blackrock, a leading investment management firm, throws a bucket of cold water on the altcoin ETF party.
Mitchnick’s conversations with clients, based on a report, reveal “little interest” in altcoins like Ethereum, let alone lesser-known players. This suggests that even if the SEC greenlights an ETF, widespread investor adoption might be slow.
SOL market cap nearing the $80 billion level. Chart: TradingView.com
Fascinatingly, for Solana, Europe seems to be ahead of the curve. There are currently several exchange-traded products (ETPs) there, pointing out a possible void in the US market a Solana ETF may close.
Legal Status: A Potential Roadblock
Though market leaders like Kelly are hopeful, a Solana ETF’s legal status presents a major obstacle. Solana is identified as a security rather than a commodity in the SEC’s actions against Coinbase and Binance in 2023.
ETFs usually deal with commodities, not securities, hence this difference is absolutely important. Emphasizing the distributed character of its blockchain system, the Solana Foundation fiercely refutes the SEC’s allegation. However, the legal uncertainty could cause a drawn-out approval procedure or perhaps SEC rejection.
Solana: The Road Ahead
If approved, the performance of an Ethereum ETF will probably serve as a harbinger for next cryptocurrencies ETFs including SOL. Furthermore, before any real advancement can be done, the SEC’s position on Solana’s legal standing has to be clearer.
Featured image from OKX, chart from TradingView