After ETH, will the next cryptocurrency to receive ETF approval be SOL?

Compiled by: Joyce, BlockBeats

Editor’s Note:

In the early hours of May 24, the U.S. Securities and Exchange Commission approved the 19b-4 forms for multiple Ethereum spot ETFs, including those from BlackRock, Fidelity, and Grayscale. The approval of Ethereum spot ETFs can be seen as the second milestone for the crypto industry following Bitcoin ETFs, reflecting the increasing influence of the crypto market on the traditional financial world.

After the approval of the Ethereum spot ETFs, Geoffrey Kendrick, head of foreign exchange and digital asset research at Standard Chartered Bank, stated that the approval of the Ethereum ETF suggests that ETH and similar tokens are not considered securities by the SEC. Given that the core technology in several cases is very similar to ETH, the SEC may find it difficult to claim they are securities, and other cryptocurrency ETFs may be approved in 2025. After Ethereum, which cryptocurrency is next in line for spot ETF approval? There are differing opinions within the community.

DLnews reported on CNBC host's view of SOL as "the next cryptocurrency ETF" and summarized the discussions among several crypto community experts regarding the possibility of SOL ETF approval. UNCHAINED host Laura Shin also organized a discussion on this issue, with Dogecoin, Litecoin, and XRP also being speculated within the community.

BlockBeats has compiled the following two reports:

CNBC host Brian Kelly stated on the show Wednesday: "You have to consider that Solana might be next."

Doura Labs CEO Michael Cahill mentioned in an interview: "Technically, the Solana ETF has similar uncollateralized characteristics to the ETH tools under review, and should not raise reasonable objections." He added, "Considering the activities of market makers, I believe the listing probability for SOL ETF this year will exceed 75%, and next year will exceed 95%."

The prediction market Polymarket, closely watched by cryptocurrency investors, reported a 7% chance of Solana spot ETF approval in 2024. The betting pool is also small, with just over $100,000. This indicates that the proposal is not attractive enough for speculators.

Nate Geraci, co-founder of the ETF Institute and president of ETF Store, is similarly pessimistic. He believes it won't happen until the market sees Solana futures contracts. Even before the approval of the spot Bitcoin ETF, Bitcoin futures contracts were already allowed to trade on the Chicago Mercantile Exchange (one of the largest derivatives exchanges in the world). The same goes for Ethereum. Geraci also stated that Congress must approve a clear regulatory framework for U.S. digital assets before a Solana ETF can be approved.

Joe McCann, founder, CEO, and CIO of Asymmetry, who identifies as a Solana maxi, believes Solana is the most likely candidate. "Bitcoin, Ethereum, and Solana could be the three giants of this cycle," McCann said, noting that given SOL's position in the market, it must be prepared. He pointed out that despite some regulatory uncertainties, Solana has still attracted significant interest from both the crypto community and traditional finance. Many investors see Solana as a promising alternative, especially for those who missed out on the Ethereum boom.

However, not everyone agrees.

Although Bloomberg Intelligence research analyst James Seyffart acknowledged that there is "the greatest demand" for SOL, he believes that Dogecoin or Litecoin may be more likely to gain recognition.

He pointed out that the SEC only hinted at viewing ETH as a security, writing on Twitter: "The lawsuits against COIN and Kraken, etc., straightforwardly say 'Solana is a security,' haha. This easily makes the road bumpy." (SOL has been designated as a security by the SEC in lawsuits against Coinbase, Kraken, and Binance.US.)

Seyffart emphasized the importance of a regulated futures market, which is a key consideration for the SEC when approving ETFs. "I don't think Solana will come anytime soon," he said. "Dogecoin or Litecoin may come sooner." He explained that the SEC is looking for a liquid and regulated futures market, which Dogecoin and Litecoin might meet before Solana.

The role of the futures market is crucial in this discussion. The Commodity Futures Trading Commission (CFTC) regulates the futures markets for Bitcoin and Ethereum, paving the way for their ETFs. Until Solana has a similar market, its chances of approval remain uncertain. Seyffart tweeted, "Based on the current regulatory framework, I don't think Solana will join the ETF for the next few years. It might be as late as 2026. But Congress could theoretically expedite this timeline."

Adam Cochran, a core member of the Synthetix team, also believes LTC and DOGE will have an easier path because "the road is cleaner (easier)."

Asgard founder Alex Kruger stated that both Solana and Dogecoin have potential, depending on the development of their futures contracts, but he admitted he "doesn't have a strong opinion."

Additionally, the legal status of XRP plays a role. Seyffart also mentioned that the outcome of the ongoing lawsuit against XRP could affect its chances. If XRP is not classified as a security, it could pave the way for its ETF, provided it has a regulated market.

UNCHAINED reporter Laura Shin believes: "Both sides of the argument make sense: LTC and DOGE have almost no regulatory burden, but if you look at it without regulatory drama, it 'makes no sense.' From the perspective of cryptocurrency usage/fundamentals (I dare say 'first principles'), SOL is 'meaningful.'"

References: 《Is a Solana ETF next? Four industry experts weigh the odds》 《After ETH, Which Crypto ETF Will Be Approved Next?》