TL;DR
- Solana ETF’s possibilities: Crypto investor Brian Kelly predicts Solana could be next in line for a US ETF, following the potential approval of an Ethereum ETF by the SEC.
- Obstacles on the road to Solana ETF approval: Regulatory hurdles could stall a Solana ETF. Unlike Bitcoin and Ethereum, Solana lacks a well-established futures product or clear legal framework, which could delay approval from the Commodity Futures Trading Commission (CFTC).
- Uncertainty about Solana ETF approval: Even with an Ethereum ETF greenlight, the approval process for other crypto ETFs like Solana might be on hold. Analyst Nate Geraci suggests regulators might hit the brakes on new crypto ETFs for a while.
Cryptocurrency investor Brian Kelly has sparked speculation that a Solana ETF (SOL) could be the next to be approved in the United States. This comes on the heels of the Securities and Exchange Commission (SEC) deciding on at least one proposed spot Ether (ETH) ETF.
Solana ETF Approval Hinges on Regulations
Kelly’s optimism isn’t universally shared. Regulatory hurdles could delay a Solana ETF. Unlike Bitcoin and Ethereum, a well-established Solana futures product on a major exchange or a clear legal framework for Solana is absent.
James Seyffart, an ETF analyst, believes a Solana ETF could be years away pending approval from the Commodity Futures Trading Commission (CFTC). However, he acknowledges the potential demand for a Solana ETF, suggesting it could surpass other digital assets.
Based on current precedent/needs — Will happen within a few years of getting a CFTC regulated futures market. But congress & Market structure bills like FIT21 could make it happen quicker.
I think a SOL ETF would see most demand vs other digital assets (aside from BTC & ETH)
— James Seyffart (@JSeyff) May 22, 2024
Nate Geraci, president of The ETF Store, throws cold water on the idea of an imminent Solana ETF. He believes a spot Solana ETF hinges on two factors: a futures product for Solana trading on a major exchange like the Chicago Mercantile Exchange (CME), or clearer regulations for cryptocurrencies beyond Bitcoin and Ethereum established by US lawmakers.
Geraci suggests that even with a green light for spot Ethereum ETFs, the approval spigot for other crypto ETFs might be turned off for a while.
The SEC’s classification of Solana as a security in past lawsuits against Coinbase and Kraken throws another wrench into the approval process. This adds complexity for potential ETF applicants, as the SEC would need to be convinced Solana meets the requirements for a security before approving an ETF.
Competition from Unexpected Sources and Industry Activity
Interestingly, Adam Cochran, a partner at Cinneamhain Ventures, suggests Litecoin (LTC) or Dogecoin (DOGE) might be approved for ETFs before Solana. While these options have lower demand compared to Solana, they might have smoother regulatory paths due to the SEC’s established stance on Bitcoin and Ethereum.
Further fueling speculation about a Solana ETF is the recent praise for Solana by Franklin Templeton, a trillion-dollar asset management firm. This has led some to believe the firm might be considering launching a Solana ETF in the future.
The developments surrounding spot Ether ETFs have also impacted the Bitcoin ETF market. BlackRock’s iShares Bitcoin Trust saw a significant inflow, reversing a trend of minimal inflows over the past few weeks. Bitcoin peaked at a six-week high of $71,600 on May 21st but has since dipped back around the $70,000 mark.
