The long-awaited approval of a spot exchange-traded fund (ETF) for Ethereum in the US seems imminent, and industry insiders are already looking ahead. Solana, a high-speed blockchain network, is emerging as a potential frontrunner for the next cryptocurrency ETF.
Brian Kelly, founder and CEO of BKCM LLC, believes Solana is a strong contender for an ETF due to its growing popularity and potential to be part of a “big three” alongside Bitcoin and Ethereum in the current crypto market cycle.
This sentiment aligns with the recent surge in anticipation surrounding Ethereum ETFs. The Securities and Exchange Commission’s (SEC) recent shift in stance, evident in the last-minute approval of Bitcoin futures ETFs in January, has fueled optimism for Ethereum and potentially 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
Interestingly, Europe appears to be ahead of the curve when it comes to Solana. Several exchange-traded products (ETPs) already exist there, highlighting a potential gap in the US market that a Solana ETF could fill.
Legal Status: A Potential Roadblock
While industry figures like Kelly are optimistic, a significant hurdle stands in the way of a Solana ETF: its legal classification. The SEC’s lawsuits against cryptocurrency exchanges Coinbase and Binance in 2023 named Solana as a security, not a commodity.
This distinction is crucial because ETFs traditionally deal with commodities, not securities. The Solana Foundation vehemently disputes the SEC’s claim, emphasizing the decentralized nature of its blockchain network. However, the legal ambiguity could lead to a lengthy approval process or even rejection by the SEC.
Solana: The Road Ahead
The success of an Ethereum ETF, if approved, will likely be a bellwether for future cryptocurrency ETFs, including SOL. Additionally, the SEC’s stance on Solana’s legal status needs clarification before any concrete progress can be made.
Featured image from OKX, chart from TradingView
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