The approval of spot Ethereum ETFs has set the cryptocurrency community abuzz with speculation about Solana as the next potential candidate for the ETF. As Ethereum ETFs opened new doors on July 23, the possibility of a Solana ETF looms large. However, the journey to have an ETF in live markets is fraught with complexities and it’s worth delving into those factors.
Let’s find out in this blog, what Solana needs to have a spot trading ETF and whether it will get ETF in 2024 within the US market.
Regulatory Landscape & Gatekeeper for ETFs
The primary gatekeeper for every cryptocurrency ETF in the U.S. is the Securities and Exchange Commission (SEC). While the approval of Ethereum ETF seemed easy, its worth noting that the similar process could not be applied for other hundreds of crypto assets awaiting for their ETFs. The ETF approval for one type of cryptocurrency does not necessarily pave the way for others. Each ETF application is scrutinized on its own merits and significant regulatory hurdles.
Where Solana (SOL) Stands?
For Solana, one of the major concerns is not availability of its future ETFs. When filed for spot ETFs, Bitcoin and Ethereum had a long history in the markets and their future ETFs were available since past years. Solana, on the other hand, is quite a new asset in the market and that too, it does not have a futures ETF yet. According to regulators, it is necessary for an asset to have a futures ETF before launching a spot ETF.
Another major issue with Solana is its issue of centralization and funding history. The SEC and other regulatory bodies will closely examine how these issues are addressed before giving a green flag. The level of decentralization and security protocols in place are crucial factors that can make or break Solana’s chances of getting an ETF approval in near future.
While all these regulatory aspects are in favor against the approval, there might be wild-card entries of several factors that could help Solana get its ETF in 2024.
Factors Pushing Solana ETF
Political Dimension
The politics and government’s stance undeniably play a key role in the approval process of ETFs. The Former President, and currently a Presidential candidate, Donald Trump’s pro-crypto policy urges voters to support him. The political landscape might also have influenced the fast-tracking and approval of the Ethereum ETF recently. As Eric Balchunas – an analyst from Bloomberg – suggested that the Democratic Party does not want to appear anti-crypto amid the election plots and they may have been swayed by such crypto-friendly considerations.
As we head towards the U.S. presidential elections of 2024, the stance of political leaders and parties on cryptocurrency could significantly impact the timeline and approval of crypto ETFs. If political sentiment continues to favor cryptocurrencies, it could turn out well for Solana as well as for the whole crypto ecosystem and the chances for SOL ETF could significantly improve.
Influence From International Markets
While the U.S. remains a critical battleground for crypto regulations, all the developments around international markets could provide optimism to crypto space. For example, the Brazilian Securities and Exchange Commission (CVM) recently approved a Solana ETF, ahead of all major markets worldwide. Although its still in pre-operational stage, such events could aspire the U.S. and other countries to work on Solana ETF and accelerate its processing.
Switzerland has also been a pioneer in this regard with 21Shares launching the first Solana-based exchange-traded product (ETP) on the SIX Swiss Exchange earlier in June 2021. All these international precedents may influence U.S. regulators, showcasing a demand and regulatory acceptance that could spill over into the American market.
Demand & Industry Support
The market demand and support from asset managers also play a pivotal role in the ETF approval process. With the great interest, VanEck and 21Shares have filed for Solana ETFs in June and they are currently awaiting first draft approval from the SEC. The involvement of these prominent asset managers indicates strong industry support and belief in the viability of a Solana ETF.
Moreover, Brazil’s QR Asset and Vortx are also set to offer and manage the Solana-based ETF respectively. This notable institutional backing highlights a robust interest in Solana as an investment vehicle, which could bolster its case for a U.S. ETF approval.
Could Solana ETF Be Approved In 2024?
The combination of regulatory scrutiny, political dynamics, international precedents, and market demand creates a complex yet hopeful scenario for Solana ETF. While the year 2024 could be a strong foundation for the upcoming bull market, we could hope that there would be significant upsticks for the crypto market throughout the remaining months. For Solana, the key factor would be how it addresses the centralization issues and how it will navigate through the intricate regulatory landscape.
The next few months will be critical for asset managers, investors, and the crypto community who collectively advocates Solana. They will be closely watching the market sentiment and if Solana can clear the necessary hurdles to join Bitcoin and Ethereum with its own ETFs. The stakes are currently high on Solana and the outcome will undoubtedly shape the future of crypto investment.
Conclusion
The potential for a Solana ETF remains a tantalizing prospect as we move forward. Whether 2024 will be the year that Solana breaks through remains to be seen, but the groundwork is being laid and the crypto world will be watching with bated breath. Let’s hope for an optimistic outcome for the Solana ETF that could upscale the crypto industry. The approval of Solana ETF would be paving the way for other crypto assets to be available among traditional finance assets.
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