Could Solana (SOL) Be the Next Big ETF in the US?
Considering recent speculation by Crypto investor and trader Brian Kelly, Solana (SOL) could potentially become the next big thing in the world of cryptocurrency exchange-traded funds (ETFs) in the United States.
On a recent episode of CNBCโs โFast Money,โ Kelly, who is also the founder and CEO of the BKCM Digital Asset Fund, raised an interesting question, โThe trade now is, whoโs next?โ
Kelly suggested that it might be wise to keep an eye out for Solana as the next big player in the ETF space, alongside Bitcoin and Ethereum as part of the big three for this new cycle.
Challenges Ahead for a Solana ETF
While Kelly is optimistic about the potential for a Solana ETF, not everyone shares his enthusiasm. Nate Geraci, the president of The ETF Store, expressed skepticism, hinting that a spot Solana ETF might face challenges until a Solana futures product is listed on a major exchange. Alternatively, regulatory clarity from Congress beyond Bitcoin and Ethereum might also be necessary.
- Nate Geraci, the president of The ETF Store, remains cautious about the possibility of a spot Solana ETF. He believes that the launch of such an ETF might depend on the listing of a Solana futures product or the establishment of a clear regulatory framework beyond Bitcoin and Ethereum.
- James Seyffart, an ETF analyst at Bloomberg, also shares Geraci’s sentiments, suggesting that the path for a spot Solana ETF may be years away and contingent on regulatory milestones such as approval from the Commodity Futures Trading Commission (CFTC).
However, regulatory hurdles could loom large in the path to a Solana ETF as the SEC has previously considered Solana as a security in lawsuits against Coinbase and Kraken, possibly complicating matters for potential ETF applicants.
โ James Seyffart (@JSeyff) May 22, 2024
Despite potential regulatory challenges, there is a recognized demand for a Solana ETF, with some industry experts suggesting that it could outperform other digital assets beyond Bitcoin and Ethereum. However, the road ahead remains uncertain due to regulatory complexities.
Fidelity’s New Move with SEC
Fidelity recently submitted an amended S-1 application to the SEC for its spot Ether ETF. In this updated application, Fidelity clarified that the underlying Ether tokens of the ETF will not be staked.
- Fidelity’s amended S-1 application to the SEC for its spot Ether ETF indicates a significant move in the crypto space.
- The updated application ensures that the underlying Ether tokens of the ETF will not be staked, providing more transparency to potential investors.
Impacts on Bitcoin ETFs
The discussions surrounding the approval of spot Ether ETFs have also had a positive impact on spot Bitcoin ETFs, with an increase in inflows noticed recently.
BlackRockโs iShares Bitcoin Trust (IBIT) experienced a substantial inflow of $290 million on May 21, breaking a trend of minimal or zero inflows over the past six weeks.
- The increased interest in spot Bitcoin ETFs can be attributed to the anticipation of spot Ether ETF approvals, indicating a positive sentiment in the market.
- BlackRock’s iShares Bitcoin Trust (IBIT) saw the highest level of inflows since April 5, showcasing renewed investor interest in digital assets.
On May 21, Bitcoin reached a six-week high of $71,600, followed by a slight dip below the $70,000 level on early trading of May 22.
Hot Take: The Future of Solana ETFs
Considering the regulatory challenges and differing opinions in the market, the road ahead for a Solana ETF is filled with uncertainty. While there is a recognized demand for such an ETF, regulatory hurdles and the evolving landscape of cryptocurrency regulations could potentially delay its launch. It remains to be seen whether Solana will indeed become the next big cryptocurrency to have a spot ETF in the US.
Sources:
https://twitter.com/JSeyff/status/1793411966071177285?ref_src=twsrc%5Etfw
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