The crypto community is abuzz with speculation about the potential for a spot Solana (SOL) exchange-traded fund (ETF) in the United States, following the recent developments surrounding the approval of a spot Ether (ETH) ETF.
The discussion was sparked by CNBC’s Brian Kelly, who suggested during a recent episode of “Fast Money” that Solana could be the next cryptocurrency to receive ETF treatment after Bitcoin and Ethereum.
TLDR
- CNBC’s Brian Kelly suggested that Solana (SOL) could potentially become the next cryptocurrency to have a spot exchange-traded fund (ETF) in the United States after Bitcoin and Ethereum.
- Some analysts disagreed, stating that a Solana futures product or regulatory clarity from Congress would be needed first before a spot Solana ETF could be approved.
- The SEC has previously categorized Solana as a security in lawsuits against Coinbase and Kraken, which could complicate the approval process for a spot Solana ETF.
- A Bloomberg ETF analyst predicted that a spot Solana ETF could have higher demand than other altcoins outside of Bitcoin and Ethereum.
- Bitcoin maximalists expressed concerns about a potential Solana ETF, arguing that approving ETFs for altcoins would open a “Pandora’s box of shitcoins.”
Kelly, the founder and CEO of the BKCM Digital Asset Fund, posed the question, “The trade now is, who’s next?” He then proposed, “You’ve got to think about Solana as probably the next one. Bitcoin, Ethereum and Solana are probably the big three for this cycle.”
However, not all industry experts share Kelly’s optimism. Nate Geraci, president of The ETF Store, expressed skepticism, stating that a spot Solana ETF might not materialize until a Solana futures product is listed on a major exchange like the Chicago Mercantile Exchange or until Congress establishes a clear regulatory framework for cryptocurrencies beyond Bitcoin and Ethereum.
Oh weird @cnbc says $SOL is the next ETF.
Hmm, where have I heard that before… pic.twitter.com/aYAedMhcM0
— ◢ J◎e McCann 🧊 (@joemccann) May 22, 2024
James Seyffart, an ETF analyst at Bloomberg, echoed Geraci’s sentiments, predicting that the launch of a spot Solana ETF could be years away, contingent upon regulatory milestones such as approval from the Commodity Futures Trading Commission (CFTC).
Seyffart highlighted another potential roadblock: the SEC, under the leadership of Gary Gensler, has previously categorized Solana as a security in lawsuits against Coinbase and Kraken, adding complexity to the path for potential ETF applicants.
Despite these challenges, Seyffart suggested that a spot Solana ETF could potentially surpass other digital assets outside of Bitcoin and Ethereum in terms of demand.
But SEC isn't dancing around SOL's status like they have ETH. Those lawsuits against COIN and Kraken and others flat out say "Solana is a security" lol. Which could very easily make this a very rocky road
— James Seyffart (@JSeyff) May 22, 2024
Adam Cochran, a partner at Cinneamhain Ventures, offered a contrasting perspective, suggesting that either Litecoin (LTC) or Dogecoin (DOGE) might beat Solana to the ETF race due to perceived cleaner regulatory pathways, despite lower demand compared to Solana.
While few ETF issuers have openly discussed the possibility of filing for a spot Solana ETF, Franklin Templeton, a trillion-dollar asset management firm, recently praised Solana and its founder Anatoly Yakovenko, fueling speculation about the firm’s potential interest in launching a Solana ETF in the future.
As the excitement surrounding spot Ether ETFs grows, with Fidelity making an amended S-1 application to the SEC yesterday, the speculation has also provided a boost to spot Bitcoin ETFs, which saw an uptick in inflows on Tuesday.
BlackRock’s iShares Bitcoin Trust (IBIT) witnessed a substantial inflow of $290 million on May 21, marking a reversal in the trend of zero or minimal inflows observed over the past six weeks.
However, not everyone is thrilled with the prospect of a Solana ETF. Bitcoin maximalists, such as “The Bitcoin Therapist,” have raised concerns, arguing that the inclusion of Ethereum in the spot ETF sphere has triggered a domino effect, unleashing a flood of lesser-known cryptocurrencies, disparagingly referred to as “shitcoins.” These maximalists remain resolute in their commitment to Bitcoin.
