Solana
Solana vs. Litecoin and Dogecoin: the next crypto ETF debate
BKCM CEO Brian Kelly recently predicted on CNBC’s “Fast Money” that Solana (SOL) could be the next cryptocurrency with a spot exchange-traded fund (ETF) in the United States. Kelly’s prediction was met with growing interest in cryptocurrencies and anticipation of the SEC’s decision on proposed Ether spot ETFs.
Key Points from Brian Kelly
Kelly said Solana ranks alongside Bitcoin (BTC) and Ethereum (ETH) as one of the top cryptocurrencies for this market cycle, but his bold prediction immediately faced pushback from the industry experts, citing several significant regulatory and market challenges.
First and foremost, the SEC classified Solana as a security, a fact cited in lawsuits against major exchanges like Coinbase and Kraken. As such, this complicates its path to approval. Unlike BTC and ETH, which currently do not have a spot ETF but a futures ETF, Solana does not have this crucial market infrastructure.
ETF analyst James Seyffart of Bloomberg Intelligence added that crypto requires a Chicago Mercantile Exchange-listed Solana futures product or a strong cryptocurrency regulatory framework from Congress before any spot ETFs.
Current situation and future prospects
Currently, Bitcoin and Ether are the only two cryptocurrencies with approved futures ETFs in the United States. Major ETF issuers have also expressed little interest in launching ETFs beyond the two digital assets. BlackRock, a major ETF issuer, has not announced any plans to launch ETFs for other altcoins, including Solana.
Despite these regulatory challenges, demand for a Solana ETF appears strong. Seyffart believes that investor interest, outside of Bitcoin and Ether, would be huge for Solana. However, these legal obstacles could make the path very long and fraught with pitfalls.
Nate Geraci, president of The ETF Store, supported Seyffart’s assessment that there likely would be no Solana spot ETF without the futures market and clearer rules. He said Congress must institute a legitimate regulatory framework for cryptocurrencies before such a product has a chance of being approved.
Contrarian opinions
Not everyone agrees with Kelly’s prediction. Adam Cochran, partner at Cinneamhain Ventures, believes that Litecoin (LTC) or Dogecoin (DOGE) could be the next cryptocurrencies to gain ETF approval due to their simpler regulatory profiles.
Both Litecoin and Dogecoin operate on a proof-of-work consensus mechanism, similar to Bitcoin, which may make their regulatory pathways less controversial.
Market sentiment is still fluid and the SEC’s position could change as regulation continues. The decision on spot Ether ETFs could be significant, possibly paving the way for ETF approval for other digital assets, including Solana.