The Inevitable Approval of a Crypto ETF on Solana in the USA
In a recent interview, the head of digital asset research at VanEck, Matthew Sigel, expressed his belief that the approval of a crypto exchange-traded fund (ETF) on Solana in the USA is inevitable.
VanEck’s Precedent with Solana ETF in Brazil
Sigel’s reasoning stems from the recent approval in Brazil. The Brazilian regulatory body, CVM, recently gave the green light for the launch of spot ETFs on Solana on Brazilian stock exchanges, following previous approvals for Bitcoin and Ethereum ETFs.
According to Sigel, Brazil has been a long-time pioneer in digital assets, even approving a BTC spot ETF ahead of other jurisdictions. This approval in Brazil suggests that the U.S. regulators may follow suit.
Sigel noted that there might be a need for regulatory or political intervention for the final approval in the USA, but with the upcoming presidential elections, he believes this turning point could be imminent.
The Performance of SOL
Despite these developments, the price of SOL did not react significantly to the news. The native cryptocurrency of Solana, SOL, saw a modest 2% gain in the last 24 hours, in line with Bitcoin’s price increase but lagging behind BNB and ETH.
- So far in 2024, SOL has recorded a 44% increase, outperforming BTC’s 40% gain and trailing BNB’s 66% surge. Ethereum, on the other hand, has only seen a marginal 16% increase.
- Solana experienced significant growth last year, reaching peaks in March, followed by a slight pullback this year.
- While the approval of ETFs is not guaranteed, recent market volatility has raised uncertainties about the potential short-term impacts.
- In 2022, SOL hit a price bottom below $10 in December, with subsequent recoveries leading to a peak of nearly $200 in 2024.
The Next Wave of Crypto ETFs
Following the introduction of Bitcoin and Ethereum ETFs on U.S. exchanges, the next likely candidates for approval could be Solana ETFs. However, BNB ETFs may face challenges due to regulatory issues with Binance in the US.
Future approvals might include XRP ETFs, as legal clarity has emerged, and Ripple’s legal battles have concluded. Presently, no ETF manager has submitted a request for XRP ETFs on U.S. exchanges.
ETFs linked to projects like Telegram’s TON or cryptocurrencies like Dogecoin, Cardano, Tron, and Avalanche are currently not on the radar for U.S. markets.
The Hurdles for Solana ETF Approval
One of the primary obstacles to launching crypto ETFs on traditional markets is the associated costs. While Bitcoin ETFs have been profitable, Ethereum ETFs have yielded lower returns.
The fixed issuance and management costs of ETFs pose risks, as insufficient revenue could lead to losses for managers. The high costs in the US market deter the launch of ETFs with uncertain success rates, contributing to the focus on Solana ETF requests.
- Bitcoin and Ethereum continue to dominate trading volumes among cryptocurrencies, with Solana showing promising traction compared to other assets.
- Presently, the success or failure of Solana ETFs in the USA will likely dictate future requests for new crypto ETFs.
Hot Take: The Future of Solana ETF Approval
Despite the challenges, the approval of a Solana ETF in the USA appears to be on the horizon, following Brazil’s pioneering lead in ETF approvals for digital assets.
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